Dollar holds gains as investors set their watches for jobs data
The dollar held on to much of its overnight gains against the yen in Asian trade Thursday, as investors await Friday’s U.S. jobs data to shape their views on the Federal Reserve’s next move.
The greenback USDJPY, +0.19% was changing hands at ¥103.50 after going as high as ¥103.62 earlier in the session. The U.S. currency was at ¥103.50 late Tuesday in New York.
Powered by strong U.S. service-sector data, the dollar surmounted a crucial resistance at ¥103.25 overnight -- a level which had capped the U.S. currency for almost one year -- and briefly hit a high of ¥103.67.
The upbeat service industry report led sent the benchmark 10-year Treasury yield TMUBMUSD10Y, +0.41% above 1.7% again, lending the dollar support. Higher oil prices near $50 a barrel and gains in U.S. stock markets also brightened market sentiment. The benchmark Nikkei Stock Average NIK, +0.47% up 0.6% at midday.
During Asia trade, the dollar maintained held on to its gains and remained above the ¥103-threshold throughout the session. But trade was mostly sideways, given the lack of fresh incentives and some profit-taking sales
“The market is now trying to get greater clarity about rate hikes this year” from Friday’s U.S. jobs report, said Ayako Sera, head of market research at Sumitomo Mitsui Trust Bank.
She added that the dollar’s recent upswing reminded her of the dollar buying spree a few weeks earlier, when expectations for a rate increase strengthened after hawkish comments from the Fed’s Jackson Hole symposium in late August. But she noted that the dollar lost ground after downbeat jobs data.
But Sera said it wouldn’t be a surprise to see nonfarm payrolls growing by over 200,000 new jobs in September, which may be strong enough to lift the dollar to test ¥104.32, which was set on Sept. 2 and considered as crucial point to bear out a turnaround in the dollar’s trend against the yen.
Among other currency trades, the pound GBPUSD, -0.2510% was weaker at $1.2720 from $1.2748 after hitting fresh 31-year low of $1.2686 Wednesday.
The WSJ Dollar Index BUXX, +0.20% a measure of the dollar against a basket of major currencies, was up 0.07% at 87.14.
Source: MarketWatch.com, wrote by: Hiroyuki Kachi