NEW YORK/LONDON, Sept 8 (Reuters) – The dollar weakened on Friday, after solid gains this week on better-than-expected U.S. economic data, but as consumer and labor markets stabilized. , the underlying solid trend remains. Interest rates may rise further this year.
Despite Friday’s decline, the dollar is headed for an eighth straight week of gains, the longest since 2014.
“The dollar is benefiting from the return of the theme of American exceptionalism,” said Vasili Serebriakov, a foreign exchange strategist at UBS in New York, noting the country’s strong economic performance relative to the rest of the world. said.
“The resilient U.S. consumer and labor markets raise questions about whether the Federal Reserve needs to raise rates further,” he added.
Meanwhile, China’s onshore yuan closed at its lowest level since 2007 as it struggled with capital outflow pressure and a widening yield gap with major economies.
In late morning trading, the U.S. dollar’s dollar index against six major currencies fell 0.2% to 104.84. The stock previously hit a six-month high of 105.15. The index was up 0.6% so far this week.
However, Serebryakov said that while eight weeks is an unusually long period of dollar strength, the dollar’s gains have been smaller each week.
“The market is already quite long on the dollar, and the upside is small, so I think the market is having a hard time pushing the dollar significantly higher,” he added.
The euro, the biggest component of the dollar index, fell for the eighth straight week, dropping 0.3% for the week. However, after falling to a three-month low on Thursday, it rose 0.4% on the day.
Data released this week showed the U.S. services sector unexpectedly gained momentum in August, with new jobless claims falling last week to the lowest level since February. Meanwhile, in the euro zone, industrial production in Germany, Europe’s largest economy, fell slightly more than expected in July.
The probability that the Fed will raise rates at its November meeting remains above 40%, but markets expect the U.S. central bank to keep rates unchanged later this month.
Sterling edged away from Thursday’s three-month low, last buying 0.2% higher at $1.2498, but was still on track to fall more than 0.8% for the week.
The Canadian dollar strengthened against the U.S. dollar after Canada added 39,900 jobs last month, compared to the median forecast for an increase of 15,000 jobs. The unemployment rate remained at 5.5%. The US dollar was last down 0.4% at $1.3625.
in no wind
On Friday, the onshore yuan opened at 7.3400 yuan to the dollar and hit 7.3510 yuan, its lowest since December 2007, while the offshore yuan hit a 10-month low of 7.3665 yuan to the dollar. fell to
China’s currency has been steadily depreciating since February as a sluggish post-pandemic economic recovery and widening yield differentials with other countries, especially the United States, affected capital flows and trade.
The onshore yuan has fallen about 6% against the dollar so far this year, making it one of the worst-performing Asian currencies along with offshore currencies.
In response to the rapid depreciation of the renminbi, the authorities have begun to slow the pace of renminbi depreciation.
The weak yen also attracted attention. Japanese prices have stabilized at 147.39 to the dollar, but remain below the key 145 level that prompted intervention by Japanese authorities last year.
Japan’s Finance Minister Shunichi Suzuki on Friday issued another warning to investors looking to sell the yen, saying sharp currency fluctuations are undesirable and authorities would not rule out any options against excessive fluctuations.
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Currency bid price at 10:44 a.m. (14:44 GMT)
Reporting by Samuel Indyk in London and Gertrude Chavez-Dreyfuss in New York. Additional reporting by Rae Wee in Singapore. Edited by: Shri Navaratnam, Gerry Doyle, Angus MacSwan, Mark Heinrich
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