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Dollar hits lowest since mid-June against yen as investors reassess US rate hike outlook

By on August 1, 2022 0
  • The dollar at its lowest since mid-June against the yen
  • Aussie dollar up
  • The euro also gains as the dollar falls

NEW YORK, Aug 1 (Reuters) – The U.S. dollar hit its lowest level since mid-June against the Japanese yen on Monday, as investors gauged the likelihood that the Federal Reserve will not raise interest rates as aggressively as some had foreseen it.

The U.S. dollar index was volatile after data showed U.S. manufacturing activity slowed less than expected in July. But a key report for investors this week will be the monthly US jobs report on Friday.

“It’s the start of a new month, and the focus is on the possibility that the Fed will slow its rate hikes,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

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“The focus is on the employment data at the end of the week, and that should confirm that the improvement in the labor market is moderating,” he said. “That’s a low number, but only considering our recent past.”

The dollar index is up about 10% for the year so far, boosted by investor expectations of an aggressive rate hike policy from the Fed.

“After a big move, I think we’re really consolidating,” Chandler said.

Last week, the Fed raised the overnight rate by three-quarters of a percentage point. The move comes on top of a 75 basis point hike last month and more modest moves in May and March, part of an effort by the US central bank to calm inflation.

Also last week, the dollar tumbled against the yen and two-year yields in the US Treasury market also fell, after data showed the US economy contracted for a second consecutive quarter. . Read more

On Monday, the dollar fell to its lowest level against the yen since mid-June, and was down from a peak of nearly 140 yen reached in late 1998 last month. The dollar was last down 1.2% at 131.65.

The dollar index was last down 0.6%.

Broad-based dollar weakness helped the euro , which rose 0.3% to $1.0260.

Currency investors were also watching news of US House Speaker Nancy Pelosi’s planned visit to Taiwan. Pelosi was due to travel to Taiwan on Tuesday, Reuters reported, citing three sources. The United States says it would not be intimidated by Chinese threats to never “stand idly by” if it made the trip to the self-governing island claimed by Beijing. Read more

The Australian dollar rose 0.5% to $0.7027.

currency positions

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Bid rates for currencies at 4:11 p.m. (GMT 2011)

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Additional reporting by Saikat Chatterjee in London; Editing by Jan Harvey, Jane Merriman, Paul Simao and Marguerita Choy

Our standards: The Thomson Reuters Trust Principles.