By Herbert Lash
NEW YORK (Reuters) -The dollar rebounded on Thursday after private payrolls and unemployment benefits reports indicated the U.S. labor market remains strong, raising the likelihood the Federal Reserve will raise interest rates later this month.
The number of Americans filing new claims for unemployment benefits increased moderately last week, the Labor Department said, while private payrolls surged last month in the biggest increase since February 2022, an ADP National Employment report showed.
A survey by the Institute for Supply Management (ISM) showed the U.S. services sector grew faster than expected in June as new orders picked up, adding to data indicating a resilient economy in the face of tighter monetary policy.
While ISM showed a measure of prices paid by businesses fell to more than a three-year low, a sign inflation would continue to cool, Dallas Fed President Lorie Logan said she was very concerned “whether inflation will return to target in a sustainable and timely way.”
The dollar index, measuring the U.S. currency against six others, including the euro and Japan’s yen, rose 0.18% to
103.51.
The major central banks for the most part are fine-tuning monetary policy, and it’s unclear when they will act as they alternate between hiking and pausing interest rates, said Brad Bechtel, global head of FX at Jefferies.
“Given all these central banks are more or less in the same place in some way, shape or form, the dollar’s going have a hard time” moving too much one way or the other, he said.
“What the dollar has going forward is typically in a cycle where global growth is slowing like we’re in now, the dollar outperforms.”
Markets are pricing in an 94.9% chance that the Fed will raise rates by 25 basis points at its policy meeting later this month, according to the CME Group’s FedWatch Tool.
The Japanese yen strengthened 0.03% versus the greenback at 144.58 as concerns about the global growth outlook, resulting from the aggressive monetary tightening by major central banks, weighed on risk appetite.
The Japanese currency is traditionally considered as a safe haven asset.
ONE DIMENSIONAL
The pound hit a two-week high against both the euro and dollar as financial markets bet that the Bank of England will raise rates to 6.5% early next year, pushing the yield on the two-year UK government bond to its highest since June 2008.
“The FX market is taking more of a ‘one-dimensional approach’ to trading the British disease,” said Stephen Gallo, global FX strategist at BMO Capital Markets.
“Instead of selling GBP in anticipation of an economic slowdown, it is buying GBP on the basis of interest rate differentials,” Gallo said.
The Chinese yuan last traded at 7.27177 per dollar in the offshore market, after having fallen about 0.4% the previous session. The central bank set a stronger-than-expected midpoint fixing for the fourth straight day this week, which traders believe is an attempt to prevent the yuan from weakening too fast and too far. [CNY/]
Bitcoin hit a 13-month high of $31,500, continuing to find support due to recent plans by fund managers to launch a U.S.-listed spot bitcoin exchange-traded fund (ETF).
Currency bid prices at 10:42 a.m. (1442 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index 103.5100 103.3400 +0.18% 0.019% +103.5700 +102.9100
Euro/Dollar $1.0838 $1.0853 -0.13% +1.15% +$1.0901 +$1.0834
Dollar/Yen 144.5950 144.6650 -0.04% +10.29% +144.6500 +143.5600
Euro/Yen 156.71 157.00 -0.18% +11.70% +157.0600 +155.8500
Dollar/Swiss 0.8992 0.8988 +0.06% -2.74% +0.8997 +0.8951
Sterling/Dollar $1.2678 $1.2703 -0.20% +4.83% +$1.2780 +$1.2674
Dollar/Canadian 1.3369 1.3285 +0.63% -1.33% +1.3370 +1.3276
Aussie/Dollar $0.6603 $0.6654 -0.78% -3.15% +$0.6688 +$0.6599
Euro/Swiss 0.9744 0.9755 -0.11% -1.53% +0.9766 +0.9738
Euro/Sterling 0.8547 0.8542 +0.06% -3.36% +0.8553 +0.8521
NZ $0.6134 $0.6179 -0.74% -3.41% +$0.6219 +$0.6133
Dollar/Dollar
Dollar/Norway 10.8200 10.6820 +1.23% +10.18% +10.8240 +10.6520
Euro/Norway 11.7288 11.5894 +1.20% +11.77% +11.7333 +11.5690
Dollar/Sweden 10.9835 10.9373 +0.30% +5.53% +10.9906 +10.9223
Euro/Sweden 11.8995 11.8636 +0.30% +6.73% +11.9409 +11.8712
(Reporting by Herbert Lash; additional reporting by Samuel Indyk in London and Rae Wee in Singapore; Editing by David Holmes and Mark Potter)
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