FOREX-Dollar stays steady following strong US jobs report, Lira hits new lows.
The dollar remained steady in comparison to the Euro on Monday and traders were taking the view that the U.S. In the coming months, the Federal Reserve will likely lift the benchmark rate to 5 percent and remain in place to limit inflation, following data that showed the economy is robust.
An earthquake struck Central Turkey along with northwest Syria as well as a strong U.S. dollar added pressure on emerging currencies, bringing the Turkish lira to a new low record of 18.85 against the dollar.
The Fed on Wednesday increased rates 25 basis points. It also claimed it had made progress in its fight against inflation, causing investors to anticipate a slowing down of rate increases in the coming months.
The eye-catching U.S. nonfarm payrolls number on Friday and an upswing in the service industry in January drove USD to a high in mid-January and investors prepared for the Fed’s policy rate , which is expected to top at 5.05 percent in June.
In comparison to an array of currencies the dollar index reached the three-week mark on Monday, which was 103.25 and was just a few cents from that level at 0926 GMT at 0926 GMT, which was rising 0.1 percent at 103.23. The index gained 1.1 percent on Friday.
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“The concern is that the far better-than-expected data could be not good news if the Fed considers it to be a reason to strengthen its case for two more hikes, and the rate being kept high for a longer period,” said Tapas Strickland, the director of market economics at National Australia Bank.
In addition, the dollar’s safe-haven status increased tensions between the United States and China after an U.S. military fighter jet destroyed an alleged Chinese surveillance balloon near the shores in South Carolina on Saturday.
FOREX-Dollar steady after robust U.S. jobs data, lira hits record low https://t.co/SI1K9A3sWg
— Devdiscourse (@Dev_Discourse) February 6, 2023
The euro fell 0.2 percent to hit a three-week low of $1.0769. The currency has risen to a record high of 10 months on Thursday following it was announced that the European Central Bank lifted its rate of deposit to 2.5 percent and said it would announce an additional 50 basis points increase in March.
The following day, Austrian central bank chief Robert Holzmann said the risk of the ECB not increasing interest rates to a sufficient level is still greater than the possibility of raising them too much because inflation in the eurozone was still far too high.
YEN WOBBLIES
The yen fell after the Nikkei newspaper published a report, citing unnamed sources from the ruling party and government that Bank of Japan Deputy Governor Masayoshi Amamiya was being called out as to be the new governor.
In a press conference on Monday the Deputy Chief Cabinet Secretary Yoshihiko Isozaki stated that there was no factual basis to reports from the Nikkei report.
In the yen, it was 0.5 percent lower at 131.90 per dollar. It had hit three-week lows at 132.60 earlier during the session.
“Amamiya has assisted Kuroda over the last year with his monetary policy, and is regarded as the most conservative of the contenders who are sabotaging hope for BOJ policy normalization might be on the way under the new head,” Saxo Markets strategists stated.
The loose policy guidelines of the BOJ are drawing criticism from all sides including opposition politicians and traders, for causing distortions in market functions.
