As U.S. payrolls statistics supported additional Federal Reserve rate hikes, the yen fell versus key rivals on Monday, illustrating a widening difference with Japan, where the central bank maintains a near-zero benchmark yield.
Beijing is a crucial trade partner for the risk-sensitive New Zealand and Australian currencies, which fell amid U.S.-China tensions over Taiwan.
As Friday’s statistics revealed, the U.S. economy added jobs quickly in March, and the yen fell 0.4% to 132.70.
In Easter-shortened trade on Friday, 10-year Treasury rates reached 3.413%. On Monday, with many Asian and European markets closed, Tokyo’s yield was 3.3719%.
The yen fell 0.5% to 144.635 against the euro. Sterling dropped 0.3%.
In a client note, Mizuho analysts Masafumi Yamamoto and Masayoshi Mihara said the dollar rose versus the yen due to solid U.S. labor market growth despite inflation and short interest rate hikes.
They claimed rates in the euro region, Britain, and Australia would follow U.S. yields upward so that the yield difference won’t increase. “Yield spreads will affect Japan more than them.”
Nevertheless, the gain in employment was less than the preceding month, and the growth in average hourly pay was less than experts predicted, which Mizuho analysts said was inconsistent with a prolonged rise in U.S. rates.
They warned that the dollar’s upside versus the yen is limited until Wednesday’s U.S. consumer pricing data surprises.
On Monday, Haruhiko Kuroda’s successor, Kazuo Ueda, is anticipated to maintain significant stimulus. 7:30 p.m. JST is his inaugural address (1030 GMT).
The Kiwi fell 0.7% to $0.62325 and the Australian 0.13% to $0.6665. Easter Monday closes stock and bond markets in both nations.
The offshore dollar rose 0.05% to 6.8784 yuan.
As Taiwan President Tsai Ing-wen returned from a brief visit to the U.S. on Saturday, China launched three days of military maneuvers simulating precise attacks against Taiwan.
The Sterling fell 0.02% to $1.2410, while the euro rose 0.02% to $1.0899.
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