The US dollar has stabilized today after fluctuating wildly over the past several sessions. Currency markets were volatile this week as investors anticipated US payroll data. The latter is due today and will influence the course of the dollar.
Meanwhile, the Japanese yen plunged. The dollar soared 0.64% against the JPY. The Bank of Japan recently announced that it would maintain its ultra-loose policy. That was at the last meeting of the current Governor, Haruhiko Kuroda. He will step down in April. While traders had expected such a result, the yen fell 0.5%, with USD/JPY trading at 136.79.
Despite that, investors expect the bank to gradually move away from its policy in the coming months. If such predictions prove correct, the yen will benefit. It suffered badly in recent months when other central banks started raising rates and Japan refused to do the same. However, the next governor might prove more willing to turn things around.
On Friday, US and European bank stocks fell along with Asian ones. This news weighed on the markets. Consequently, yields on European and US government bonds also plunged. However, the safe-haven dollar supported US yields, stabilizing them a bit.
The dollar index changed hands at 105.17 against six major currencies. On the other hand, the euro finally traded at $1.0587.
What do the analysts say?
Chris Turner, regional head of research for the UK and Central and Eastern Europe at ING, said the February jobs release in the US on Friday and recent developments in the banking system are responsible for the new volatility in the markets. currency markets. According to him, some currencies suffered due to such turbulence. For example, the Hungarian forint and the Mexican peso plummeted. The guilder fell 0.8%, while the peso lost 2.2%.
Turner also added that the Norwegian krone and the Canadian dollar also declined. Overall though, the G10’s currency performance was mixed today. The US currency soared to a five-month high against the Canadian dollar, trading at Cdn$1,386. At the same time it jumped at 10.75 against the Norwegian krone.
On the other hand, the dollar fell 0.57% against the Swiss franc. The coin hit its lowest level in more than two weeks at 0.927. It was also shaved 0.92% in the previous session. Deutsche Bank analysts stated today that if traders thought fed funds prices were too close to peaking, they should sell USD/CHF. That comment also contributed to the strength of the franc.
In addition, the pound sterling rose 0.5% against the dollar and the common currency. Reports showed that the UK economy grew more than investors expected in January. Market participants welcomed this news as it indicates that the country’s economy remains strong.
Traders are currently focusing on the US Non-Farm Payrolls report. It could offer clues on the Federal Reserve’s next policy moves. Economists expect nonfarm payrolls to show an additional 205,000 jobs over the past month after an increase of 517,000 in January.
How are emerging currencies doing today?
Emerging Asian currencies also fluctuated on Friday. The Indonesian rupiah is trading in the red. It cut the most along with the Thai baht. Meanwhile, the rupee declined as much as 0.4% today. The rupee has been one of the best performing currencies in 2023. But it looks set for a fifth straight weekly loss. The baht also had a rough week. It fell more than 1% during this week.
Former Malaysian Prime Minister Muhyiddin Yassin was charged today with various offences. Yassin has denied allegations of abuse of power and money laundering regarding projects launched during his tenure as prime minister, saying they are politically motivated and untrue. He will still have to answer the charges.
On Friday, the Malaysian ringgit rose 0.1%. Despite that, the coin remained on track for its sixth straight week of losses. Today, Thailand’s finance minister stated that the government expected the country’s economy to grow by 3-4% in 2023. The tourism sector is recovering and the authorities expect it to maintain economic growth.
Also, traders are looking forward to the Bank Indonesia meeting next week. They expect the bank to keep its interest rate unchanged. At the same time, analysts forecast India’s consumer price index last month to be subdued.
