Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

Dollar hits 4-week peak, then eases, sterling lower after BOE hike

Published 08/02/2023, 10:20 PM
Updated 08/03/2023, 03:23 PM
© Reuters. FILE PHOTO: U.S. Dollar banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration

By Herbert Lash

NEW YORK (Reuters) -The dollar slid from a four-week peak on Thursday after U.S. labor market data failed to impress a day before a key jobs report, and as Treasury yields rose but eased at the short end.

Nonfarm-productivity rose to an annualized 3.7% to help curb growth in labor costs and aid an improving U.S. inflation outlook. But labor productivity has grown at a 1.4% rate since the fourth quarter of 2019, well below the long-term average since 1947 of 2.1%.

Other data showed the number of Americans filing new claims for unemployment benefits rose slightly last week, while layoffs fell to an 11-month low in July amid a tight labor market.

"The activity data in the U.S. has shown a lot of resilience compared to the rest of the world," said Vassili Serebriakov, FX and macro strategist at UBS in New York, adding he did not find the day's data "particularly impactful."

The dollar also has been bolstered by the carry trade, when investors borrow in currencies with low interest rates and invest in the dollar or dollar-based assets.

As the Federal Reserve prepares for its annual symposium from Aug. 24-26 in Jackson Hole, Wyoming, signs that the U.S. central bank is close to ending hiking interest rates may appear, nudged by the Fed's counterparts in Europe.

"It's the European central banks that have offered more clarity about the peak in interest rates," said Thierry Wizman, global FX and currencies strategist at Macquarie in New York.

3rd party Ad. Not an offer or recommendation by See disclosure here or remove ads .

"You would think that the disinflation story being more prominent in the U.S., that it would be the Fed signaling more clarity on the top in interest rates," he said.

The European Central Bank last week signaled it may take a break at its next meeting in September as inflation continues to fall and growth weakens.

The dollar index, which measures the currency against six major peers, fell 0.039%.

The closely watched U.S. nonfarm payrolls report is due on Friday.

Sterling remained lower after the Bank of England downshifted to a smaller 25 basis point hike. The pound last traded at $1.27, down 0.07% on the day.

"The relative disparity in the trajectory of future monetary policy, against a backdrop of better-than-expected economic growth data, has catalyzed a rally in the UK pound this year," said John Leiper, chief investment officer at Titan Asset Management.

"But momentum has dwindled recently, following the latest inflation number ... and signs today that the bank is becoming a little more relaxed around the direction of travel."

The safe-haven Japanese yen strengthened 0.40% at 142.72 per dollar, benefiting from risk aversion as global equities extended their recent decline. Earlier, the currency fell to a four-week low of 143.89 per dollar.

The Japanese currency had come under pressure this week even as the Bank of Japan on Friday loosened its grip on interest rates. Policymakers have also been quick to push back against speculation that the move was a prelude to an imminent exit of the central bank's ultra-easy policy.

3rd party Ad. Not an offer or recommendation by See disclosure here or remove ads .

The euro rose 0.04% to $1.094, while the Aussie hit a two-month low of $0.6514.

Elsewhere in Asia, China's offshore yuan strengthened after data on Thursday showed the country's services activity expanded slightly faster in July, though investors continue to be on the lookout for further support measures from Beijing following last week's Politburo meeting.

Currency bid prices at 3:04 p.m. (1904 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change


Dollar index 102.5400 102.5900 -0.04% -0.918% +102.8400 +102.3600

Euro/Dollar $1.0941 $1.0938 +0.03% +2.11% +$1.0963 +$1.0913

Dollar/Yen 142.7250 143.3500 -0.44% +8.85% +143.8850 +142.0700

Euro/Yen 156.17 156.76 -0.38% +11.31% +157.2300 +155.5400

Dollar/Swiss 0.8753 0.8778 -0.31% -5.37% +0.8798 +0.8736

Sterling/Dollar $1.2699 $1.2712 -0.09% +5.01% +$1.2727 +$1.2620

Dollar/Canadian 1.3354 1.3351 +0.04% -1.42% +1.3378 +1.3330

Aussie/Dollar $0.6548 $0.6538 +0.16% -3.94% +$0.6568 +$0.6514

Euro/Swiss 0.9577 0.9598 -0.22% -3.21% +0.9612 +0.9561

Euro/Sterling 0.8614 0.8604 +0.12% -2.59% +0.8655 +0.8597

NZ $0.6070 $0.6080 -0.15% -4.39% +$0.6097 +$0.6063


Dollar/Norway 10.2470 10.3030 -0.60% +4.35% +10.3250 +10.2150

Euro/Norway 11.2142 11.2671 -0.47% +6.87% +11.2854 +11.1819

Dollar/Sweden 10.7108 10.7024 +0.08% +2.91% +10.7554 +10.6835

Euro/Sweden 11.7198 11.7106 +0.08% +5.12% +11.7546 +11.6998

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.