Dollar edges up as U.S. rates seen higher for longer

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The dollar firmed against major peers in Asian trading after a robust U.S. jobs report spurred traders to price in higher interest rates for longer.

climbed more than 3 basis points to 3.727% in Tokyo. The dollar rallied 0.84% against the yen on Friday.While headline U.S. jobs growth was much stronger than expected in May, wage pressures eased and the unemployment rate climbed off a 53-year low, potentially giving thescope to pause their rate hiking campaign at the upcoming June 13-14 meeting, as some officials had voiced a preference for doing last week.

However, those bets simply shifted to July, and traders eased off on bets for rate cuts later in the year.tool shows interest rate traders are laying 1-in-4 odds for a hike next week, down from 2-in-3 odds a week earlier. For July, markets put 70% odds for rates to be at least a quarter point above where they are currently.

"It's very data-driven, and given that wages are moderating, it would point to a potential pause — but I don't believe they're done," said Bart Wakabayashi, a branch manager at State Street in Tokyo.Wakabayashi expects the dollar to push up to 142.50 yen, and a clear break of that would open the way to 145.Aussie

was flat at $0.6605, recovering from early losses of as much as 0.25%, aided by more evidence of China's recovery from the pandemic. The private-sector Caixin/S&P Global services purchasing managers' index rose to 57.1 in May from 56.4 in April — contrasting with the official PMI released last week that showed a slower pace of expansion.

The yuan edged up, reversing an earlier decline. The U.S. dollar was 0.03% lower at 7.1074 yuan in offshore trading, after earlier gaining 0.15%. It reached a six-month high at 7.1404 on Thursday.

 

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Dollar edges up as US rates seen higher for longerThe dollar firmed against major peers in Asian trading after a robust U.S. jobs report spurred traders to price in higher interest rates for longer.
Source: Reuters - 🏆 2. / 97 Read more »