May retail sales released this week were soft and the labor market appears to be weakening. The number of Americans filing new claims for unemployment benefits fell last week, but was still more than expected, data released Thursday showed, showing that the job market remained strong despite a gradual cooling.
“The US (Purchasing Managers Index) could provide a further catalyst for a higher volatility day tomorrow, so we’ll keep our eye on that to finish the week,” said Helen Given, associate director of trading at Monex USA. in Washington.
Against the yen, the dollar hit its highest level since April 29 and was last up 0.51% at 158.89 yen in New York trading. Traders remain on alert for signs of continued intervention by the Bank of Japan to boost the currency, which hit a 34-year low in late April.
Yen markets were jittery last week after Japan’s Dow Bank kept its policy target and said it intended to soon unveil plans to trim bond purchases.
“I think the market was kind of disappointed by the Bank of Japan’s actions. For the market it felt like kicking the can down the road again for the yen,” said Amo Sahota, director of Clarity FX in San Francisco.
“Well, in that case, we’ll go ahead with the very simple carry trade that we’ve been doing. The Bank of Japan and the Finance Ministry might be getting a little nervous or focused on the risks of intervention.”
Japan’s top currency diplomat Masato Kanda said earlier Thursday that there is no limit to the resources available for foreign exchange intervention, GG News Agency reported.
Along with the yen’s weakness, weakness in the euro and sterling supported the dollar index, which tracks the currency against six peers, up 0.4% to 105.61.
The euro was last down 0.34% against the dollar at $1.0708. It hit a session low of $1.0706, but remained above a six-week low hit at $1.0667 on Friday.
Sterling fell 0.42% to $1.2667, after hitting a five-week low in afternoon trading. Earlier in the day, the Bank of England left rates on hold, with some policymakers saying their decision not to cut was “overbalanced”.
The Swiss franc also fell after the Swiss National Bank cut interest rates to 1.25% following a March cut.
The dollar rose 0.7% to 0.8909 francs as the Swiss currency tumbled from a nearly three-month high after a rate cut that came with inflation forecast to fall further to 1.1% in 2025.
The dollar index rose after 10 days of volatility that rocked European markets on mixed US economic data and political uncertainty in France.
“All told, it looks like the dollar is headed for its fifth straight week of gains as the US economy isn’t as bad as many of its peers,” Given said.
Among cryptocurrencies, bitcoin rose about 0.4% to $65,105.
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