Dollar falls after jobless claims rise; Fed in spotlight. After a jump in weekly unemployment claims raised hopes that U.S. interest rates were nearing a peak, the dollar fell on Friday, pulled down by lower U.S. Treasury yields. The focus switched to the forthcoming week of central bank meetings.
Last week, the number of Americans filing new claims for unemployment benefits rose to the highest in more than 1-1/2 years. However, the data spanned the Memorial Day vacation, which could have injected some volatility.
However, investors interpreted the data as a sign of a slowing U.S. labor market, sending the dollar to a two-week low against a basket of currencies.
In Asia trade on Friday, the dollar index fell more than 0.7%, its biggest daily drop in weeks, to 103.41.
The index, which compares the U.S. dollar to six major counterparts, fell 0.6% this week, its weakest performance since mid-March.
U.S. Treasury yields fell, sending the dollar to a one-week low of 138.765 against the Japanese yen. It cost $139.27.
On Thursday, the 10-year Treasury yield fell seven basis points to 3.7317%. The two-year yield, which follows interest rate expectations, was 4.5261%.
The U.S., like many economies, will experience a minor recession this year. “That’ll show up in payrolls and jobless claims and these sorts of numbers,” said Kiwibank chief economist Jarrod Kerr.
Sterling reached a near-month high of $1.2564, while the Kiwi fell 0.11% to $0.6089.
After President Tayyip Erdogan nominated U.S. finance professional Hafize Gaye Erkan to head Turkey’s central bank, the lira fell more than 1% to 23.54.
“A return to policy orthodoxy seems inevitable given the materially diminished foreign exchange reserves and 40% inflation,” said Federated Hermes senior portfolio manager for emerging markets fixed income Mohammed Elmi.
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