Yen struggles to keep intervention gains; US dollar near 6-week low on Iran deal concerns, payroll jitters
Markets remained watchful as tensions continued to play out in the Gulf
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[HONG KONG] Currency markets drifted on Thursday with the Japanese yen retracing some intervention-led gains and the dollar stuck near six-week lows, as concerns about a proposed US-Iran deal and jitters about upcoming US payroll data left traders cautious.
The yen was flat at 157.75 per US dollar following modest declines for two straight sessions. It has now given back some intervention-driven gains after touching 155.20 per US dollar on Monday, but remains well off a multi-decade low of about 164.
The yen also slipped 0.06 per cent against the Singapore dollar to 123.12 per Singapore dollar at 2.44 pm on Thursday.
The euro was steady at US$1.1548 and sterling traded flat at US$1.3456. The New Zealand dollar and the Australian dollar were 0.2 per cent weaker, last trading at US$0.5875 and US$0.7043, respectively.
The dollar index, which tracks the US currency against six major peers, was little changed at 99.70, continuing to struggle for direction after it hit a six-week low on Monday.
Markets remained watchful as tensions continued to play out in the Gulf after Reuters reported a proposed deal between Iran and Oman to help end the US-Iran conflict could give Teheran control over inbound traffic through the Strait of Hormuz.
However, there was no immediate US comment on the proposal. US President Donald Trump has said a deal to reopen the strait was imminent, but US officials have repeatedly insisted they would never agree to Iran controlling access to the world’s most important trade route for energy supplies.
Brent crude futures were down 0.3 per cent at US$79.25 a barrel, near the levels last seen when the US and Iran signed an interim peace agreement in June.
“The market’s very much in sort of watch and wait mode,” Ray Attrill, head of FX strategy at National Australia Bank, said in a podcast.
“We haven’t got the oil market volatility that has really been the key driver of most markets in recent days and weeks,” he said, adding that markets were waiting to see whether a deal would be struck at all.
Payroll data in focus
Investors are now turning their focus to US payroll data that could provide more clues on the US Federal Reserve’s interest rate path, after data showed the country’s services sector stayed strong in July while services-sector employment slowed.
A Reuters survey of economists expected July’s employment report on Friday to show non-farm payrolls increased by 80,000 jobs in July after rising 57,000 in June. The unemployment rate is forecast to hold steady at 4.2 per cent.
US Fed governor Lisa Cook said on Wednesday that she was open to the idea that the central bank may need to raise its short-term interest rate target to deal with “too high” levels of inflation in the US economy.
Meanwhile, San Francisco Fed President Mary Daly said she was “completely supportive” of the Jul 29 decision to hold rates steady and added that more data is needed before September’s meeting. REUTERS
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