US Dollar (DXY) benefited from positive US statistics, reaching its highest level since mid-March above 105.00.
US Dollar is consolidating its gains early Thursday as investors await weekly Initial Jobless Claims data and an adjustment to the second-quarter Unit Labor Costs print. Market players will also pay particular attention to Federal Reserve (Fed) policymakers’ comments.
According to the ISM Services PMI survey released on Wednesday, business activity in the US service sector continued to rise at a rapid pace in August. The underlying details survey revealed that employment in the sector increased at a solid rate, but input price pressures increased. The 10-year US Treasury note yield has risen to 4.3%. Following this report, the USD gained strength as investors reviewed the prospect of the Fed hiking policy rates one more time before the end of the year.
US Dollar impact on other currencies
On Wednesday, the EURUSD approached within a hair’s breadth of 1.0700 for the second day in a row, but found support. The two were last seen heading sideways just over that level. Later in the session, Eurostat will provide revisions to the second-quarter Employment Change and GDP statistics.
On Wednesday, the GBP vs US Dollar fell below 1.2500 for the first time since June 12. Despite a minor recovery at the end of the day, the pair failed to stabilize above that level in the Asian session on Thursday. Aside from the broad-based If inflation became sticky, stricter monetary policy would be required.
The USDCAD reached its highest level since March above 1.3670 before falling below 1.3650 on Thursday. The Bank of Canada (BoC) said on Wednesday that its policy rate remained unchanged at 5%, as expected. Tiff Macklem, Governor of the Bank of Canada, will present the Economic Progress Report later in the day.
At roughly 147.50, the USDJPY lost its bullish impetus and entered a consolidation phase. “Further YCC tweaks cannot be ruled out as an option if inflation expectations rise further, but this is not an imminent issue now,” said Bank of Japan (BoJ) board member Junko Nakagawa on Thursday.
On Friday, the gold price fell for the fifth consecutive day, falling below $1,920. in September for the first time. With the 10-year US yield remaining unchanged early Thursday, XAUUSD trades in a narrow channel just below $1,920.
