Forex
Dollar steadies near six-month highs; U.S. economy shows resilience


© Reuters.
Investing.com – The U.S. dollar steadied near a six-month peak in early European trade Thursday, boosted by signs of a resilient U.S. economy even as the global outlook weakened.
At 03:00 ET (07:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher to 104.897, having earlier reached just short of 105, its highest level since mid-March.
U.S. economy shows resilience
Data released Wednesday showed that activity grew more than expected in August, with a gauge of prices in the sector also rising further.
The readings fueled concerns that inflation will remain sticky in the near-term, eliciting a continued hawkish outlook from the Federal Reserve.
Unemployment data later in the session is expected to show that the U.S. labor market remains healthy, with expected to rise slightly to 235,000 from 228,000 the prior week.
Also of interest Thursday will be the plethora of Fed officials due to speak later at a fintech conference hosted by the Philly Fed, before they enter the blackout period ahead of their meeting later this month.
Weak German industrial production weighs on euro
Elsewhere, the economic news looks a lot less impressive.
fell 0.1% to 1.0719, near its lowest level since June, after fell 0.8% in July compared to the previous month, more than the expected 0.5% drop, underlining the challenges faced by manufacturing in Europe’s largest economy.
European Central Bank policymakers were keen to warn investors on Wednesday that the central bank could still hike interest rates again, in what would be its 10th consecutive rise, when they meet next week.
However, with economic activity deteriorating across the region, expectations are rising that the Governing Council will choose to pause, even if it keeps the door open to further moves.
British house prices slump
fell 0.1% to 1.2502, not far away from the three-month low seen in the previous session, after data from Halifax, the U.K.’s largest lender, showed that fell 4.6% on an annual basis in August.
This suggests that prices are falling at the fastest rate since the aftermath of the financial crisis, and things are likely to get worse with Halifax expecting further downward prices on property prices.
Weak trade data weighs on Chinese yuan
rose 0.1% to 7.3254, with the yuan falling to its weakest level since November 2022, after weak economic data from China also dented sentiment towards Asian markets, with both and in the country continuing to decline through August, albeit at a slower-than-expected rate.
fell 0.1% to 147.50, with the yen near a 10-month low, weighed by two Bank of Japan officials reiterating that the bank is likely to maintain its ultra-dovish policy in the near-term.
Forex
Greenback keeps on climbing, dollar index at 10-month high


© Reuters. FILE PHOTO: Woman holds U.S. dollar banknotes in this illustration taken May 30, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
By Brigid Riley and Alun John
TOKYO/LONDON (Reuters) – The euro, pound and yen were all pinned at multi-month lows on Tuesday, with the Japanese currency on the brink of weakening past the psychological 150 per dollar level, as surging U.S. Treasury yields kept the dollar firmly on the front foot.
The euro was steady on the day at $1.0476, around its weakest since early December 2022, after a near-1% plunge on Monday when U.S. manufacturing data came in strong and Federal Reserve officials said monetary policy would need to stay restrictive for “some time”.
The combination of that and an agreement to avert a partial U.S. government shutdown sent benchmark Treasury yields to as high as 4.706% on Tuesday, a 16-year peak, in turn driving the dollar higher.
“There are two very powerful things that are supporting the U.S. dollar at the moment, the real rate differential is favourable to the U.S. and the U.S. economy is outperforming,” said Samy Chaar, chief economist at Lombard Odier.
Real interest rates, unlike nominal ones, factor in inflation which is falling faster in the United States than in Europe.
Chaar said he also thought there were technical factors driving the sell-off in U.S. Treasuries, possibly capitulation by major investors, as the economic situation, in his view, did not justify yields continuing to rise.
The pound fell to its lowest since March and was last down 0.26% at 1.20565, and traders were focused on the Japanese yen which was flat on the day at 149.89 per dollar, but still around its weakest in nearly a year and just shy of the 150 per dollar level that some see as potentially pushing Japanese authorities to intervene to prop up the currency.
Japanese Finance Minister Shunichi Suzuki said on Tuesday authorities were watching the currency market closely and stood ready to respond, but also said any decision on currency market intervention would be based on volatility, not specific yen levels.
Although Japanese officials have stated “that the government is not watching any particular level … interventions had previously occurred around 150, signifying official discomfort when the (yen) weakens beyond this point”, said Wei Liang Chang, foreign exchange and credit strategist at DBS.
The , which tracks the unit against six peers, was up 0.13% at 107.16, at its highest since November.
The main data points in the United States this week relate to the labour market. “(Tuesday’s) U.S. JOLTS job openings and non-farm payrolls on Friday can be a catalyst to push up U.S. yields and the USD if they surprise to the upside,” said Carol Kong, economist and currency strategist at Commonwealth Bank of Australia (OTC:).
The Australian dollar slipped to an 11-month low of $0.6302, down as much as 0.95% following the Reserve Bank of Australia’s (RBA) decision to hold rates, while Russia’s rouble weakened past the symbolic threshold of 100 to the dollar before recovering slightly in early trade.
The dollar was up 0.5% against the Swiss franc at 0.9215 at a six month high after Swiss inflation dipped and came in slightly below expectations
Forex
South African rand weakens against US dollar amid unfavorable local data and rising US Treasury yields


© Reuters
On Tuesday, the South African rand depreciated against the US dollar, a development attributed to unfavorable local economic data and rising US Treasury yields. The ABSA Manufacturing PMI’s decline signaled a growing divergence between the South African and US economies. This disparity was further highlighted by the hawkish remarks made by Fed official Mester.
The influence of China’s National Day Golden Week on commodity prices also contributed to the softer rand, favoring the safe-haven dollar. Market participants are closely observing the forthcoming speech by Raphael Bostic, Atlanta Fed Chief, which could potentially impact currency trends.
The pair is grappling with the 19.3000 resistance handle, revealing a rising wedge pattern that suggests a brief upside rally may be imminent. The susceptibility of Emerging Market currencies, particularly in relation to the USD/ZAR support levels, is being underscored in light of these developments.
These observations highlight the current state of global currency markets and underline the potential risks and opportunities for investors. As always, market participants are urged to closely monitor these dynamics as they evolve in response to both domestic and international economic indicators.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
Forex
USD/JPY Poised at Critical 150 Level, Goldman Sachs Predicts Rise to 155


© Reuters.
The currency pair is currently teetering on the significant 150 level, influenced by minor fluctuations in U.S. Treasury yields, as of Tuesday. Market speculation is focused on the potential intervention by the Japanese Ministry of Finance (MOF), which could trigger follow-on trades and stops if this level is exceeded.
Goldman Sachs, however, has a different outlook. The multinational investment bank and financial services company foresees the USD/JPY climbing to 155, without any necessity for intervention. This prediction is backed by strong USD/JPY fundamentals.
This current situation mirrors the events of last October when the USD/JPY surged to 151.94 before experiencing a swift reversal. The market will be closely watching these developments and any potential interventions or lack thereof from the Japanese MOF.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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