Dollar Under Pressure, Several Currencies Begin to Recover
The US dollar headed for its biggest weekly decline since April on Friday (July 3). Pressure arose after weaker-than-expected US jobs data dampened market expectations of an imminent Federal Reserve interest rate hike.
The dollar's weakness gave other major currencies room to strengthen. The euro hovered near a two-week high of US$1.1454 and rose 0.6% over the week. The British pound also strengthened to US$1.3371, recording a 1.2% weekly gain, its best performance in nearly three months.
The Japanese yen also received some relief from the dollar's weakness. The Japanese currency held steady at around 161.03 per US dollar after previously falling to a 40-year low. Despite the recovery, the market remains wary of possible intervention by Japanese authorities.
The dollar weakened after the US jobs report showed that June's employment growth slowed sharply. Data for the previous two months was also revised downward, reducing the market's chances of a Fed rate hike. According to CME FedWatch, the probability of a September interest rate hike fell to 52% from 64% previously.
US government bond yields also fell following the data. The two-year yield, which is sensitive to interest rate trends, fell 4 basis points, halting a three-day winning streak. OCBC analyst Sim Moh Siong assessed the jobs data as dovish, as it eased market concerns about a sluggish US job market.
However, the dollar's outlook remains weak as long as expectations of Fed tightening persist. The dollar index fell around 0.2% to 100.70 and weakened 0.6% over the week. Meanwhile, Japan again warned the market that it was ready to support the yen if needed, especially amid a thin trading session due to the US Independence Day holiday. (asd)
Source: Newsmaker.id
