The U.S. dollar edged higher Friday, helped by positive news about the U.S. jobs market, while the Japanese yen gained after a relatively hawkish Bank of Japan policy meeting.
At 04:00 ET (08:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% higher to 97.175, rebounding after falling earlier in the week to its lowest since February 2022.
Dollar helped by weekly claims data
The dollar received a boost in the previous session after data showed that the number of Americans filing new applications for unemployment benefits fell last week, reversing the prior week’s jump.
Initial claims for state unemployment benefits decreased 33,000 to a seasonally adjusted 231,000 for the week ended September 13. Claims in the prior week had jumped to 264,000, a level last seen in October 2021.
“This was rare positive news on the jobs market, and one that justifies the dollar’s staying bid for now,” said analysts at ING, in a note.
This helped the dollar bounce back after the Federal Reserve cut interest rates on Wednesday, for the first time this year, and suggested the likelihood of two more reductions this year.
That said, “we still think the dollar is trading too much on the strong side after the Fed meeting and expect some pullback in the coming days. Cheaper funding costs should contribute to fuel hedging demand for the USD and prevent larger appreciative trends,” ING added.
Foreign exchange traders are also keeping a wary look on the political outlook as the U.S. Supreme Court on Thursday set a date of November 5 for arguments it will hear concerning the legality of Trump’s global tariffs.
Trump has also repeatedly criticised the Fed for not cutting rates quickly and more deeply, stoking concerns about the independence of the U.S. central bank.
On Thursday, the Trump administration asked the U.S. Supreme Court to let the president move ahead with firing Federal Reserve Governor Lisa Cook, a move without precedent.
Sterling lower after borrowing data
In Europe, GBP/USD traded 0.5% lower to 1.3490, after Britain’s borrowing surged past the official forecasts that underpin the government’s tax and spending plans.
A day earlier, the Bank of England kept interest rates on hold and slowed the pace of its programme to run down its government bond stockpile.
EUR/USD traded 0.1% lower to 1.1773, paring gains amid political unrest as hundreds of thousands took part in anti-austerity protests across France on Thursday, urging new Prime Minister Sebastien Lecornu to scrap looming budget cuts.
“Their latest political news isn’t very encouraging, as the new prime minister is facing harsh union opposition to his fiscal plans, and negotiations with the Socialists – who are believed to hold the key to passing the budget – have not yielded good results so far,” ING said.
Yen gains after BoJ meeting
Elsewhere, USD/JPY dropped 0.1% to 147.88, with the yen gaining after the Bank of Japan left interest rates unchanged at 0.5% as widely expected. Two members of the bank’s nine-member rate-setting board, however, called for a 25 basis point hike.
The central bank outlined plans to begin selling its massive holdings of exchange-traded funds and real estate investment trusts.
The move struck markets as hawkish, given that the BOJ had proposed trimming its balance sheet when it began unwinding nearly a decade of ultra-loose monetary policy in early-2024.
USD/CNY traded largely unchanged at 7.1122, with the yuan remaining in sight of a recent 10-month low. Beijing announced plans to dole out more stimulus measures aimed at boosting private consumption, following a string of weak economic prints for August.
AUD/USD traded 0.1% lower to 0.6606, after hitting 10-month highs earlier, while NZD/USD dropped 0.2% to 0.5874, continuing to fall after its biggest one-day decline since April on Thursday in the wake of grim second quarter GDP data.
Source :
https://www.investing.com/news/forex-news/dollar-gains-after-jobs-boost-yen-helped-by-boj-meeting-4246233
