US Dollar hits one-month high against yen, turns choppy ahead of jobs report
Frankfurt (Sept 1) The dollar gained against the yen Thursday, as choppy trading persisted before release of the closely watched U.S. jobs data on Friday and its potential clues for the near-term fate of interest rates.
The dollar USDJPY, +0.20% firmed slightly to ¥103.68 from ¥103.42 late Wednesday in New York. Dollar-yen had traded weaker, changing hands as low as ¥103.06.
The euro EURUSD, -0.0717% slipped to $1.1150 from $1.1158 late Wednesday.
The ICE Dollar Index DXY, +0.01% a measure of the buck against a basket of six currencies, was up 0.01%.
After advancing to a one-month high of ¥103.69 overnight, boosted by a reported gain in U.S. private employment data, the greenback met with some profit taking during the Asian session. It then rebounded again, modestly.
Investors are awaiting the U.S. jobs data to get more clarity about the Federal Reserve’s near term action on rates following hawkish signals for a rate rise or two this year from several tops officials at a Fed symposium over the weekend. A strong payrolls reading could bolster the case for raising short-term rates within this year.
Read: Friday could be an important turning point for the dollar
“Investors need to watch jobs data to determine their short-term approach. That’s making them to wait and see,” said Shusuke Yamada, chief FX strategist at Merrill Lynch Japan Securities.
Merrill economists expect nonfarm payrolls grew by 180,000 in August, while the jobless rate likely stood at 4.8% and the hourly wage likely increased 0.2%.
But even if the jobs data comes in line with this outlook, “it’s a bit too early to raise rates in September,” said Yamada. Although such a possibility can’t be ruled out, it may take longer for the Fed to take an action, he said, adding that a rate increase in December is more likely.
“The dollar is unlikely to jump straight to [the] upside,” said Yamada. The dollar could touch ¥104.50 if the jobs data fare well, but it’s still premature to expect sustained dollar gains above the ¥104-threshold, he said.
Still, the dollar may be close to bottoming out or may already have touched its bottom, said Yamada. “I think the market mood is changing considerably.”
Meanwhile, yields on U.K. government debt and the pound moved firmly higher on Thursday after data showed the country’s manufacturing sector rebounded sharply in August. The Markit/CIPS purchasing managers index jumped to 53.3 for the month, up from the 41-month low of 48.3 recorded in July following the Brexit vote. Analysts had expected the manufacturing PMI to climb to 49.6.
The pound GBPEUR, +0.8917% jumped to its highest level against the euro in almost a month, trading at €1.1887, up from €1.7774 late Wednesday. Against the dollar GBPUSD, +0.8144% , sterling rose to $1.3252 from $1.3138.
Source: Reuters
