US jobs data reveal, dollar hits 20-year high
The dollardollar is headed for a third consecutive week of gains, hitting multi-decade highs against the euro and yen on Friday, ahead of U.S. labor data that could underpin aggressive rate hikes. Investors have little sell sentiment.
A strong US manufacturing survey was enough to push the dollar above ¥140 for the first time since 1998, hitting multi-year highs against the pound sterling and kiwi.
Against the strong dollar, the euro fell below par to $0.9967, not far from his 20-year low of $0.99005 last week. The yen hit a new low of 140.4 yen in Asian trading.
The dollar index hit a 20-year high overnight at 109.99 and was last seen at 109.51. It is up more than 1% this week after Federal Reserve Chairman Jerome Powell said in Jackson Hole, Wyoming, that interest rates need to be higher “for some time” to keep inflation under control. , which surprised the market.
The pound fell 0.7% overnight and is down about 1.5% this week. After reaching $1.1499 overnight, he ended up at $1.1551.
The Australian and New Zealand dollars have each fallen about 1% this week, with the Australian dollar bottoming out at $0.6789 and the Kiwi dollar bottoming out at $0.6051, their lowest since May 2020.
Steve Englander, head of G10 foreign exchange research at Standard Chartered, said: “We thought the economic slowdown was enough to suspend rate hikes by the Fed until November, but Fed Chairman Powell has made it clear that tightening policy is the way to go. Agreed suggests that the hurdles for a moratorium are high.”
“He believes the U.S. labor market needs to slow significantly to avoid a 75 basis point rise in interest rates,” he said. Non-farm wage data is due at 12:30 GMT, with economists expecting 300,000 jobs added in August, extending a strong data series. Inglander said it would take a surprise well below $275,000 to change the outlook for interest rates.
Fed funds futures priced in about a 75% chance that the Fed will raise interest rates by 75 basis points this month, with a week of heavy selling in the Treasury market and a 12 basis point drop in the 2-year yield. 10-year yields fell. Yields increased 23 basis points.
The 2-year yield hit a 15-year high of 3.551%, and the 10-year yield hit a 2.5-month high of 3.297%.
These moves have been especially supportive of the dollar’s march against the yen, as Japanese yields have been pegged at near zero. Chief Cabinet Secretary Hirokazu Matsuno said on Friday that the Japanese government is watching currency movements with a keen sense of urgency.
Elsewhere in Asia, the Chinese yuan is also under pressure at $6.907 and his new Covid-19 lockdown measures in Chengdu are weighing on investor sentiment.
US jobs data reveal, dollar hits 20-year high
Central bank meetings are scheduled in Europe and Australia next week, and the market expects rate hikes. Traders see about a 60% chance of a 50 basis point rate hike in Australia and about an 80% chance of a 75 basis point rate hike by the European Central Bank.
