The U.S. currency was stable against the Japanese yen after a three-day rebound, supported by a rise in Treasury yields.
The dollar hovered near a one-week high against major rivals on Friday, after the biggest decline in U.S. jobless claims in close to a year eased concerns of a looming economic downturn.
China’s yuan gained following a stronger-than-expected inflation figure and a firmer official exchange-rate fixing.
The U.S. currency was stable against the Japanese yen after a three-day rebound, supported by a rise in Treasury yields as Thursday’s firmer-than-expected employment data spurred a paring back in bets for Fed interest rate cuts this year.
The yen and fellow safe-haven currency Swiss franc stayed near one-week lows as Asian equities built on an overnight rally on Wall Street, while riskier currencies such as the Australian dollar and sterling stayed higher.
Markets have endured a turbulent week, triggered in large part by surprisingly weak U.S. payrolls numbers a week ago that sent global stocks down, while demand for the safety of assets like the yen and the Swiss franc sent the currencies soaring to their highest levels since the start of the year on Monday.
The dollar declined 0.1% to 147.08 yen as of 0450 GMT, on course for a gain of nearly 0.4% this week, despite Monday’s steep 1.5% decline.
It dropped 0.1% to 0.8659 franc, on track for a 1% weekly advance.
Initial claims for state unemployment benefits fell 17,000 to a seasonally adjusted 233,000 for the week ended August 3, the biggest decline in nearly 11 months.
The odds of the Fed cutting interest rates by 50 bps at its next policy meeting on September 17-18 declined to 54%, from 69% a day earlier, with a 25 basis point cut now seen as having a 46% chance, as per the CME Group’s FedWatch Tool.
Despite the volatility in claims data, especially around this time of year, the data helped allay fears of a more rapid deterioration in the labour market, according to Taylor Nugent, senior markets economist at National Australia Bank.
The outsized Wall Street rally, which spurred the flight from the yen and Swiss franc, was “an unusual reaction to such a volatile weekly print, underscoring the market’s sensitivity to labour market indicators after Friday’s soft payrolls,” he said.
