The dollar index fell to a fresh two-month low of 101.43, after slipping 0.5 percent overnight
Singapore (Armfalcon.com) – The US dollar held near two-month lows early in the Asian session Wednesday morning, as weak economic data supported views that the Federal Reserve was nearing the end of its monetary tightening cycle.
Data overnight showed US job vacancies fell to their lowest level in nearly two years in February, suggesting that labor market conditions were finally easing.
Job vacancies, a measure of labor demand, fell by 632,000 to 9.9 million in the last day of February, the monthly Job Opening and Labor Turnover Survey, or JOLTS report, showed. Economists polled by Reuters had forecast 10.4 million openings.
The dollar index, which measures the US currency against six other major currencies, fell to a fresh two-month low of 101.43, after slipping 0.5 percent overnight.
The euro rose 0.12 percent to $1.0965, hovering near a two-month peak it touched on Tuesday (4/4/2023). Sterling last traded at $1.2509, up 0.08 percent this morning, just shy of a 10-month high hit the previous day.
The Kiwi rose 0.08 percent to $0.632 ahead of a policy decision from the New Zealand central bank (RBNZ) later in the day.
The central bank is expected to slow the pace of monetary tightening, raising interest rates by only 25 basis points. Investors will be closely watching the accompanying comments for any clues about the end of the tightening cycle.
Rodrigo Catril, senior currency strategist at National Australia Bank, said the decline in job vacancies underscores a softening in US labor demand, with further declines expected over the coming months.
“Focus will turn to the key employment report on Friday (7/4/2023), where consensus favors further moderation in non-farm payrolls data (NFP) growth to 240K.”
The softer-than-anticipated jobs data caused the market to change its outlook for a rate hike. The market is now pricing in a 59 percent chance the Fed will keep rates unchanged at its May policy meeting, the CME FedWatch tool showed. Markets are pricing in a 43 percent chance the Fed will not raise interest rates the day before.
A Reuters poll of foreign exchange strategists suggests the US dollar will likely weaken against most major currencies in 2023, as the interest rate gap with its peers narrows, putting the US currency on the defensive after leading for several years.
In the US bond market, the yield on the two-year Treasury bond, which usually moves in line with interest rate expectations, rose 1.4 basis points to 3.848 percent, after dropping 14 basis points on Tuesday (4/4/2023).
The yield on the 10-year US Treasury rose 1.1 basis points to 3.348 percent, after dropping 9 basis points overnight.
Cleveland Federal Reserve President Loretta Mester said Tuesday (4/4/2023) that while the economy appears to be on a path to a slowdown, the central bank likely has more rate hikes ahead of it.
The Australian dollar rose 0.18 percent to $0.676, a day after Australia’s central bank kept interest rates unchanged at 3.6 percent, snapping 10 straight hikes, saying it needed more time to assess the impact of past hikes.
The Japanese yen strengthened 0.21 percent to 131.41 per dollar.
Also read: Dollar falls on sluggish data, markets bet the Fed is nearing the end of its run
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Translator: Apep Suhendar
Editor: Click Dewanto
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