Dollar hits two-month low, pound hits 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 U.S. central bank was nearing the end of its tightening cycle. The pound hit a 15-month high on expectations that wage growth outpaced expectations.

The dollar fell to a four-week low of 140.17 yen against the yen. The last traded at 140.385 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 CHF0.8797.

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 0.3% to 101.65.

“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 and City Index.

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

“Meanwhile, (Tuesday) morning’s strong UK wage growth data and continued Japanese yen short squeeze have traders worried about (Wednesday)’s US CPI report, while the US dollar’s biggest rival2 Stocks are going up,” Weller added.

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 ended 0.6% higher at $1.2930.

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 recently rose 0.2% to US$0.6697 and the New Zealand currency fell 0.3% to US$0.6197 ahead of the Reserve Bank of New Zealand’s policy decision on Wednesday.

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Currency bid price at 4:11 PM (2011 GMT)

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

previous change


Dollar Index 101.6600 101.9200 -0.24% -1.768% +101.9700 +101.6600

EUR/USD $1.1005 $1.1001 +0.05% +2.73% +$1.1027 +$1.0977

USD/JPY 140.3500 141.3150 -0.68% +7.05% +141.4550 +140.1700

EUR/JPY 154.46 155.45 -0.64% +10.09% +155.6700 +154.1900

USD/Swiss 0.8796 0.8854 -0.64% -4.86% +0.8856 +0.8796

GBP/USD $1.2930 $1.2860 +0.55% +6.93% +$1.2934 +$1.2858

USD/Canada 1.3233 1.3280 -0.34% -2.32% +1.3289 +1.3234

AUD/USD $0.6687 $0.6677 +0.16% -1.90% +$0.6695 +$0.6652

Euro/Switzerland 0.9679 0.9737 -0.60% -2.18% +0.9753 +0.9677

EUR/GBP 0.8510 0.8553 -0.50% -3.78% +0.8562 +0.8505

$0.6197 $0.6212 -0.26% -2.42% +$0.6224 +$0.6168


USD/Norway 10.3480 10.4770 -1.14% +5.54% +10.4790 +10.3510

Euro/Norway 11.3880 11.5250 -1.19% +8.59% +11.5385 +11.3876

USD/Sweden 10.6669 10.7481 -0.77% +2.49% +10.7604 +10.6606

EUR/Sweden 11.7340 11.8255 -0.77% +5.24% +11.8415 +11.7266

(This article has been re-edited to insert abbreviated letters for the word “scales” in the heading)

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