June 02, 2023 (MLN): The U.S. dollar wallowed near a one-week low versus major peers on Friday, on course for its worst week since mid-January, amid strengthening views that the Federal Reserve will forgo an interest rate hike this month, as Reuters reported.
The US Senate’s passage of a bill to suspend the debt ceiling and avert a disastrous default also removed a pillar of support for the dollar.
This had paradoxically been a key beneficiary because of its safe-haven status.
The Australian dollar surged after an increase in the minimum wage stoked bets for the central bank to raise rates again next week.
The U.S. dollar index, which measures the greenback against a basket of six rivals, weakened 0.06% to 103.48 in Asian trading, extending a 0.62% slide from Thursday, its worst day in almost a month.
For the week, the index is on course to lose 0.73%.
Philadelphia Fed President Patrick Harker said on Thursday that “it’s time to at least hit the stop button for one meeting and see how it goes,” referring to the June 13-14 meeting.
A day earlier, Fed Governor Philip Jefferson had said that “skipping a rate hike at a coming meeting would allow the committee to see more data before making decisions about the extent of additional policy firming.”
Some softness in US manufacturing data overnight supported the case for a pause, although jobs figures continue to print hot, putting even more focus than usual on the monthly non-farm payrolls report later in the day.
“The key is non-farm payrolls tonight, which could determine if there’s going to be a hike in coming months, whether that’s in June or July,” said Shinichiro Kadota, senior currency strategist at Barclay in Tokyo.
“It’s really data-dependent at this point,” he added. “Maybe they hike in June, maybe in July, or maybe they don’t hike anymore.”
Money markets currently see about 29% odds of a hike, down from nearly 70% earlier in the week.
The dollar ticked down 0.13% to 138.65 yen, after dropping to as low as 138.44 on Thursday for the first time since May 24.
The pair tends to track US long-term Treasury yields, which were at 3.61% in Tokyo after dipping overnight to the lowest since 18 November at 3.57%.
The euro was about flat at $1.0767, after reaching a one-week high of $1.07685 in the previous session, when European Central Bank President Christine Lagarde gave the shared currency a boost by saying further policy tightening was necessary.
Meanwhile, the Senate passed a bill to lift the government’s $31.4 trillion debt ceiling late on Thursday, getting it ready for President Joe Biden to sign well ahead of a Monday deadline.
Copyright Mettis Link News
Posted on: 2023-06-02T11:49:27+05:00
