The U.S. dollar fluctuated Friday. What about the Japanese Yen?
The U.S. dollar surged forward against the basket of six major currencies on Friday. U.S. data showed that employers hired more workers in September than analysts expected. This news may incite the Federal Reserve to maintain its aggressive tightening policy in the near future.
According to the Labor Department, nonfarm payrolls soared by 263,000 jobs in August. Meanwhile, economists had forecast approximately 250,000 job gains. Adam Button, the chief currency analyst at ForexLive in Toronto, noted that the greenback is in a crowded position. Any sign of economic weakness will weigh heavily on the currency, but nonfarm payrolls don’t indicate that the U.S. economy is suffering.
The U.S. dollar index climbed up by 0.1% before lowering again. Despite that, the index is still higher by about 18% for 2022 thus far. Moreover, the greenback tumbled down versus the Japanese yen on Friday. It traded flat against the Yen as last. The Japanese currency stayed close to a 24-year low of 145.90 reached last month. The latter caused the Japanese government to intervene and help the Yen, but the currency continued declining.
How are the Euro and Sterling faring today?
In Europe, the euro plummeted against the U.S. dollar, exchanging hands lower by 0.3% at $0.9764. Several Fed officials hinted today that the central bank would continue hiking rates to hinder the soaring inflation. Traders are now waiting for the U.S. inflation data, which is due next week.
The U.S. central bank has already increased its policy rate from near-zero at the beginning of 2022 to the current range of 3.00% to 3.25%. Last month, the policymakers also signaled more large increases this year. That would impact the dollar’s price and, consequently, the other currencies’ moves.
Meanwhile, the British Pound shaved off 0.1% at $1.1148 on Friday after dropping by 1.4% overnight. The sterling had jumped earlier this week after the British authorities decided to reverse an intended cut to the highest rate of income tax.
What about the EM currencies?
Asian currencies and equities decreased on Friday. The Taiwan dollar and South Korean won suffered the most. The latter plunged by as much as 0.8%, experiencing its worst day since September 28. The Asian trade bellwether announced its biggest current account deficit for the last month in over two years, causing the won’s decline.
Analysts from Goldman Sachs noted that the recent underperformance of the won was mostly due to a sharp deterioration in South Korea’s trade balance. But the government’s multi-market stabilization measures and a turnaround in current account balances should bolster the currency.
On Friday, the Taiwan dollar dropped by about 0.3%. Despite that, it’s higher by 1% for the week. On Thursday, the country reported a marginal increase in inflation for this month, but it was broadly in line with traders’ expectations.
Meanwhile, the Malaysian ringgit tumbled down by about 0.3% during this session. Higher oil prices weren’t enough to boost the currency. Investors are waiting for the government to issue its 2023 budget. Other EM currencies, like the Indonesian rupiah and the Philippines peso, also dropped by 0.3% and 0.1%, respectively.
