Dollar falls to 2-month low, pound rises to 15-month high on wage growth data

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NEW YORK: The dollar fell to two-month lows against major currency indexes on Tuesday after a Federal Reserve official suggested the central bank was nearing the end of its tightening cycle, while salaries increased. Expectations that the pound hit a 15-month high after outperforming growth.

The dollar fell to a four-week low of 140.17 yen against the yen. Finally, it was traded at 140.335 yen, down 0.7%. The US currency also fell to a two-and-a-half-year low against the Swiss franc, hitting a low of 0.6% at CHF0.8799.

Fed officials said on Monday that the Fed would likely need more rate hikes to keep inflation in check, but the end of the current monetary policy tightening cycle was nearing.

The remarks pushed traders back on expectations about how much more U.S. interest rates need to rise and the dollar fell to a two-month low of $101.66 against a basket of currencies. The dollar index recently fell 0.2% to 101.69.

“Friday’s NFP (Nonfarm Payrolls) report reveals a potential crack in the U.S. labor market for the first time since COVID-19, prompting the Fed to raise interest rates in the second half of the year1,” Matt said. It suggests that there is a possibility that we will have to settle with only one round.” Mr. Weller is Head of Global Research for Forex.com and City Index.

The June nonfarm payrolls report showed the slowest job growth in two-and-a-half years.

“Meanwhile, strong UK wage growth data released this morning and a continued Japanese yen short squeeze have pushed two of the dollar’s biggest rivals higher as traders worry about tomorrow’s US CPI report. We have,” added Weller.

US core consumer prices are expected to rise 5% annually in June. The CPI data should further clarify the Fed’s progress in fighting stubborn high inflation.

“Market participants should remember that US economic data releases still have the potential to shock. End yields could rise again and the dollar could make a surprising rally,” said Karl Schamotta, chief market strategist at Copay in Toronto.

Strengthening of the European currency

The pound surged to a 15-month high of $1.2934 after record wage gains in the UK and mounting pressure on the Bank of England to tighten policy further to curb inflation. It last rose 0.5% to $1.2920.

Analysts said the pound rose as it actively reflected the strong economy and hopes of a tightening of policy by the Bank of England.

The euro climbed to a two-month high of $1.1027 before trading slightly higher at $1.1006 on the day.

Other European currencies also performed well, with the Norwegian crown hitting a three-month high against the dollar and the Swedish crown hitting a two-week high against the dollar.

In Japan, the yen has risen more than 3% since hitting a seven-month low last month, but this time the yen depreciated above the much-watched 145 yen to the dollar level, prompting traders to call for intervention by Japanese authorities. I was very cautious about the possibility.

Elsewhere, the Australian dollar was flat at $0.6674 while the New Zealand currency fell 0.4% to $0.6191 ahead of the Reserve Bank of New Zealand’s policy decision on Wednesday.

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Currency bid price at 1:16 p.m.

Description RIC Final US Win % YTD % High Bid Low Bid

previous change

session

Dollar Index 101.7000 101.9200 -0.21% -1.730% +101.9700 +101.6600

EUR/USD $1.1003 $1.1001 +0.04% +2.71% +$1.1027 +$1.0977

USD/JPY 140.3850 141.3150 -0.66% +7.07% +141.4550 +140.1700

EUR/JPY 154.48 155.45 -0.62% +10.11% +155.6700 +154.1900

USD/Swiss 0.8799 0.8854 -0.62% -4.84% +0.8856 +0.8798

GBP/USD $1.2919 $1.2860 +0.46% +6.83% +$1.2934 +$1.2858

USD/Canada 1.3252 1.3280 -0.23% -2.22% +1.3289 +1.3246

Australia/Dollar $0.6671 $0.6677 -0.06% -2.11% +$0.6695 +$0.6652

Euro/Switzerland 0.9683 0.9737 -0.55% -2.14% +0.9753 +0.9678

EUR/GBP 0.8516 0.8553 -0.43% -3.71% +0.8562 +0.8505

$0.6188 $0.6212 -0.36% -2.52% +$0.6224 +$0.6168

dollar/dollar

USD/Norway 10.3530 10.4770 -1.16% +5.51% +10.4790 +10.3550

Euro/Norway 11.3928 11.5250 -1.15% +8.64% +11.5385 +11.3906

USD/Sweden 10.6709 10.7481 -0.79% +2.53% +10.7604 +10.6693

EUR/Sweden 11.7318 11.8255 -0.79% +5.22% +11.8415 +11.7266

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