Tom Westbrook

SYDNEY – If the U.S. Labor data, due Friday night, supports the argument for an early Federal Reserve interest rate increase, the dollar could see a fifth consecutive week of gains against the Japanese yen.

Although the greenback reached its five-year maximum on the yen at 116.235 on Tuesday, it is now trading at 115.93 in Asia.

This week it is up by 0.7% and over the last five weeks, 2.7% respectively. These gains are due to firming expectations from the Fed that it could increase rates soon, possibly in March or several times throughout this year. This has driven a selloff of bonds and an increase in yields. [US/]

The Japanese yen is the biggest loser of all major currencies. However, traders believe the Bank of Japan may lag in global interest rate increases. But, overall, it has been a positive for the dollar.

It’s aiming to have its best week since last month, compared with the Australian and New Zealand dollar.

It fell to support at $0.7184, and the last time it was bought was $0.7171. The stock has fallen 1.3% so far this week. It was at 0.6747, a close to a 2-week low. The stock fell 1.4% in the first week of trading 2022. [AUD/]

Also, the greenback has risen 0.7% to $1.1293/euro for the week. This currency rose to an all-time high of 6.3975 for the week on Thursday, and is now at 17 months on South Korean won.

James Bullard of St. Louis Fed stated that Fed may also reduce its balance sheet shortly after hiking begins. Mary Daly, dovish San Francisco Fed president, claimed the reduction will occur in tandem with normalising rates.

Market expectations were beaten by miles on Wednesday’s partial labour data. Friday’s strong nonfarm payrolls number, particularly if larger than the forecasted 400,000 jobs, may help to support the argument for faster hikes.

According to NatWest analysts, “If it is very strong, the Fed has more fuel for maintaining the hawkish rhetoric which further supports the March hiking probability,” adding that the downside is likely to be limited.

Sterling has performed well in other currencies this week, as traders believe the Bank of England is also on its way to a new hiking track. The last time it bought £1.3533 was Tuesday’s 2-month peak of $1.3599. [GBP/]

The rising Omicron cases also cause jitters. In emerging markets, the Thai baht dropped 1% against the US dollar Thursday as the country raised the virus alert level. This signals tighter restrictions. [EMRG/FRX]

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Exchange bid prices starting at 0102 GMT

Description: RIC U.S. Last Close Pct. Change YTD High Bid Low

Previous changes

Session

Euro/Dollar

$1.1299 $1.1300 -0.01% -0.62% +1.1299 +1.1290

Dollar/Yen

115.9400 115.8500 +0.09% +0.82% +116.0400 +115.8900

Euro/Yen

131.00 130.88 +0.09% +0.52% +131.0500 +130.8600

Dollar/Swiss

0.9213 0.9213 +0.07% +1.07% +0.9217 +0.9216

Sterling/Dollar

1.3538 1.3536 +0.03% +0.12% +1.3540 +1.3528

Dollar/Canadian

1.2710 1.2727 -0.12% +0.54% +1.2730 +1.2712

Aussie/Dollar

0.7171 0.7163 +0.12% -1.34% +0.7172 +0.7158

NZ

Dollar/Dollar 0.6745 0.6747 -0.10% -1.52% +0.6747 +0.6740

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