Laura Matthews
NEW YORK (Reuters) – The dollar rose to a seven-week high against the yen on Thursday, while sterling and the euro fell as the U.S. economy emerged from the boil and traders awaited more data to bolster the case for Federal backup system. rate reduction this year.
Retail sales for May, released this week, were moderate and the labor market appears to be weakening. The number of Americans filing new claims for unemployment benefits fell last week but was still higher than expected, data showed Thursday, indicating the labor market remains strong despite a gradual cooling.
“Tomorrow the US (Purchasing Managers’ Index) could be an even bigger catalyst for a higher volatility day, so we’ll be keeping an eye on that to wrap up the week,” said Helen Given, deputy director of trading at Monex USA. in Washington.
The dollar hit its highest level since April 29 against the yen and was last up 0.51% at 158.89 yen in New York trading. Traders remain concerned about signs that the Bank of Japan will continue to intervene to strengthen the currency, which hit a 34-year low in late April.
Yen markets were rattled after the dovish Bank of Japan maintained its target policy last week and said it intended to soon publish a plan to reduce bond purchases.
“I think the market was somewhat disappointed with the Bank of Japan’s actions. It was like throwing the can at the yen again for the market,” said Amo Sahota, director at Klarity FX in San Francisco.
“Well, in that case, we’ll just continue with the very simple carry trade we were already doing. The Bank of Japan and the Ministry of Finance must be a little nervous or focusing again on the risks of intervention.”
Japan’s top currency diplomat Masato Kanda said earlier on Thursday that the resources available for currency interventions were unlimited, Jiji News Agency reported.
Along with the yen’s weakness, weakness in the euro and pound sterling supported the index, which tracks the currency’s gains against six peers, by 0.4% to 105.61.
The euro was last down 0.34% against the dollar at $1.0708. It hit a session low of 1.0706 but remained above a six-week low of $1.0667 hit on Friday.
Sterling fell 0.42% to $1.2667 after hitting a five-week low in afternoon trading. Earlier in the day, the Bank of England left rates unchanged, with some policymakers saying their decision not to cut was a “finely balanced” decision.
The Swiss franc also fell after the Swiss National Bank cut interest rates to 1.25% following a cut in March.
The dollar rose 0.7% to 0.8909 francs as the Swiss currency fell from about a three-month high following a rate cut that came as forecasts predicted inflation would fall further to 1.1% in 2025.
The dollar index rose after a volatile 10 days as mixed economic data in the United States and political uncertainty in France rocked European markets.
“Overall, it looks like the dollar will rise for the fifth week in a row simply because the economic situation in the US is not as bad as many other countries,” Given said.
In cryptocurrencies, Bitcoin rose about 0.4% to $65,105.