The US dollar swung between gains and losses after a report showed US jobs growth last month exceeded forecasts, while the unemployment rate moved up and wage increases slowed.
The US currency posted a weekly advance versus the euro on speculation the 287,000 increase in jobs last month gives the US Federal Reserve added scope to raise interest rates. Futures repriced, signaling that traders see a 21 percent probability the central bank will raise interest rates by the end of the year, up from 12 percent on Thursday, as the US economy appears resilient in the midst of global growth concerns.
“What you’re seeing is the euphoria settling down after the large print regarding the jobs numbers,” said Minh Trang, a senior foreign-exchange trader at Silicon Valley Bank in Santa Clara, California. “Even though the 287,000 number today is pretty strong, it really isn’t if you spread it over two months.”
The greenback gained 0.8 percent this week to US$1.1051 per euro as of 5pm in New York. On Friday, it rose as much as 0.6 percent and weakened as much as 0.5 percent. The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, fell 0.3 percent on Friday, paring a weekly gain of 0.3 percent.
Taiwan’s financial markets were closed on Friday as Typhoon Nepartak pounded the nation’s eastern coast. The US dollar fell against the New Taiwan dollar on Thursday, shedding 0.3 percent to close at NT$32.306. However, it was 0.3 percent higher compared with Friday last week.
The yen has climbed 1.9 percent against the US dollar since July 1, as an investor flight from UK property forced a number of funds to halt withdrawals.
“We have got ￥95 penciled-in as our end-Q3 forecast against the [US] dollar,” said Ned Rumpeltin, the European head of currency strategy at Toronto Dominion Bank in London. “The yen is benefiting both from a pervasive sense of risk aversion as well as a more general concern over global growth. The former may be amplified by repatriation inflows by Japanese investors, but we’re waiting to see real evidence of that emerging.”
The yen advanced 0.3 percent to ￥100.49 per US dollar as of 7:01am in New York, gaining for a fourth day. It climbed to as high as ￥99.02 per US dollar for the first time since 2013 on June 24, in the immediate aftermath of the UK vote to quit the EU. Japan’s currency appreciated 0.3 percent to ￥111.20 per euro.
Traders will be watching the Bank of England’s (BOE) first policy meeting since the Brexit referendum for fresh reasons to sell the pound.
Speculation is building that BOE Governor Mark Carney will use the Thursday gathering to follow up on his pledge to take whatever steps are necessary to spur the economy.
The chances of the central bank cutting interest rates have jumped to 74 percent, from 11 percent just before the decision to leave the EU was announced. While lower borrowing costs can help stoke growth and inflation, they tend to undermine a currency.
“An interest-rate cut could intensify the downward pressure on the pound,” said Jane Foley, a senior currency strategist at Rabobank International in London. “The BOE meeting will clearly set the direction.”
Sterling dropped 2.5 percent this week to US$1.2938 as of 5pm in London on Friday.
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