Dollar Rebounds, Yen Under Pressure Ahead of Japanese Election
The US dollar strengthened again against most G10 currencies during the European session on Wednesday (February 4), after traders began to brake the euro and pound's rally. The Bloomberg Dollar Spot Index rose around 0.2%, supported by a slight rise in the 10-Year US Treasury yield to 4.27%. The market also returned its focus to US data after the partial shutdown officially ended Tuesday night.
The most notable movement came from Japan. USD/JPY rose around 0.55% to around 156.74 (its highest level since January 23), as the yen weakened ahead of this weekend's crucial election—the market assessed that fiscal policy risks (spending/tax cuts/defense agenda) were still weighing on the Japanese currency.
Meanwhile, EUR/USD did strengthen briefly, but then eased off and is now tending to stabilize around 1.18 (example: 1.1833 in the Reuters report). GBP/USD hovered around 1.3703 (up slightly from the previous close), as markets await ECB and Bank of England (BoE) decisions that could potentially keep volatility high.
In the commodity market, AUD/USD was flat at 0.7021 (up slightly from the previous close). Meanwhile, NZD/USD fell around 0.4% to 0.6024 after data showed New Zealand's unemployment rate rose to its highest level in about 10 years in Q4—cooling expectations of an interest rate hike.
Source: Newsmaker.id
