The U.S. dollar steadied today after fluctuating wildly over the last several sessions. Forex markets were volatile this week while investors anticipated U.S. payroll data. The latter is due today and will influence the dollar’s course.
Meanwhile, the Japanese yen plummeted. The greenback soared by 0.64% versus JPY. The Bank of Japan recently announced that it would maintain its ultra-easy policy. That was at the last meeting for the current Governor, Haruhiko Kuroda. He will leave the post in April. While traders expected such an outcome, the yen dropped by 0.5%, with USD/JPY pair trading at 136.79.
Despite that, investors expect the bank to move from its policy in the coming months gradually. If such predictions prove right, the yen will benefit. It suffered greatly over the last months when other central banks started hiking rates, and Japan refused to do the same. However, the next governor might prove more amenable to changing things.
On Friday, U.S. and European banking shares plunged low along with Asian ones. This news weighed on the markets. Consequently, European and U.S. government bond yields also tumbled down. The safe-haven greenback supported the U.S. yields, though, steadying them somewhat.
The dollar index exchanged hands at 105.17 against six major currencies. On the other hand, the euro traded flat at $1.0587 at last.
What do the analysts say?
Chris Turner, the regional head of research for the U.K. and central and eastern Europe at ING, stated that the U.S. February jobs release on Friday and recent developments in the banking system are responsible for the new volatility in the F.X. markets. According to him, some currencies suffered due to such turbulence. For example, the Hungarian forint and the Mexican peso both plummeted. The forint shaved off 0.8%, while the peso lost 2.2%.
Turner also added that the Norwegian krone and Canadian dollar declined as well. However, overall, G10 forex performance was mixed today. The U.S. currency skyrocketed to a five-month peak versus the Canadian dollar, trading at C$1.386. At the same time, it jumped at 10.75 against the Norwegian crown.
On the other hand, the greenback tumbled by 0.57% against the Swiss franc. The currency hit its lowest level in more than two weeks at 0.927. It also shaved off 0.92% in the previous session. Deutsche Bank analysts stated today that if traders thought Fed Fund pricing was very close to peaking, they should sell USD/CHF. That comment also contributed to the franc’s strength.
Furthermore, the British pound surged forward by 0.5% versus the greenback and the common currency. The reports showed that the U.K. economy grew more than investors expected in January. Market participants welcomed this news as it indicates that the country’s economy remains robust.
Traders are currently focusing on U.S. nonfarm payrolls report. It might offer hints about the Federal Reserve’s next policy moves. Economists expect nonfarm payrolls to show additional 205,000 jobs over the last month after soaring by 517,000 in January.
How are the E.M. currencies faring today?
Emerging Asian currencies also fluctuated on Friday. The Indonesian rupiah traded in the red. It shaved off the most amount along with Thailand’s baht. Meanwhile, the rupiah decreased by as much as 0.4% today. The rupiah has been one of the best-performing currencies in 2023. But it seems set for a fifth straight weekly loss. The baht also had a hard week. It tumbled by more than 1% during this week.
Malaysia’s former Prime Minister Muhyiddin Yassin was accused of several crimes today. Yassin has denied the accusations of abuse of power and money laundering regarding projects initiated during his premiership, asserting they are politically motivated and not true. He will still have to answer the charges.
On Friday, the Malaysian ringgit rallied by 0.1%. Despite that, the currency remained on track for its sixth consecutive week of losses. Today, Thailand’s finance minister stated that the government expected the country’s economy to grow by 3% to 4% in 2023. The tourism sector is rebounding, and the authorities hope it will sustain economic growth.
Furthermore, traders are waiting for the Bank of Indonesia’s meeting next week. They expect the bank to maintain its interest rate unchanged. At the same time, analysts forecasted that India’s consumer price index for last month would be moderate.
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