Dollar steadies after losses on soft jobs data, yen slips

SINGAPORE: The dollar steadied on Friday after losing ground overnight on the back of US data showing further signs of a cooling labour market, while the yen dipped as investors pushed back after suspected intervention last week.

Against the yen, the dollar was trading at 155.73 yen, up 0.17 per cent but unable to reclaim Thursday’s 155.95 high.

The euro stood at $1.0783, almost flat after a 0.3 per cent gain overnight, while the British pound inched higher after data showed the UK economy beat expectations in the first quarter.

That meant the dollar index, which measures the green back against its major peers, was little changed at 105.26 after falling 0.3 per cent on Thursday.

The retreat followed data showing a jump in initial claims for US state unemployment benefits. Coming on top of last week’s weak payrolls report, it further encouraged investors that the Federal Reserve will start lowering interest rates in the third or fourth quarter and spurred buying of stocks and bonds, pulling down yields.

Alvin Tan, head of Asia FX strategy at RBC Capital Markets, said the dollar was unlikely to fall too far, however, given that high US interest rates still make US bonds attractive.

“They’re still offering the highest rates in the G10 space. So that, in tandem with low volatility, suggests the US dollar will remain supported,” he said. “It’s setting up to be more range-trading unless we see some kind of a shock.”

The yen was on track to lose around 1.7 per cent against the dollar for the week, as traders continued to test the resolve of Japanese authorities to support the currency.