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Dollar edges lower ahead of payrolls; yen weakens after BOJ stands pat

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Dollar edges lower ahead of payrolls; yen weakens after BOJ stands pat
© Reuters.

By Peter Nurse

Investing.com – The U.S. dollar edged lower in early European trade Friday ahead of the key monthly jobs report, and the yen weakened after the Bank of Japan retained its ultra-dovish stance.

At 04:00 ET (08:00 GMT), the , which tracks the greenback against a basket of six other currencies, traded 0.2% lower at 105.125, but was on track for a weekly gain of 0.7%.

The dollar has handed back some of the week’s strong gains after the weekly data, released on Thursday, showed that the number of Americans filing new claims for unemployment benefits increased by the most in five months.

However, losses are minor as traders await the release of the widely-watched monthly later in the session. This was an economic release that Federal Reserve Chair specifically mentioned earlier this week as influencing the thinking of the central bank policymakers as far as further hikes are concerned.

Nonfarm payrolls are expected to have increased by 205,000 jobs last month, a slowdown from the blockbuster 517,000 added in January, but the possibility of another upside surprise exists, especially after Powell’s hawkish tone in his semi-annual testimony to Congress.

Elsewhere, rose 0.2% to 136.32 after the held interest rates at record lows earlier Friday, and said it will continue with its very soft monetary policy in the last meeting with Governor Haruhiko Kuroda in control.

Kazuo Ueda is set to take over the leadership of the central bank, and has signaled that he will maintain the BOJ’s ultra-dovish stance, at least in the near term.

rose 0.2% to 1.0602 after German consumer prices, harmonized to compare with other European Union countries, rose by 9.3% on the year in February, up 1.0% on the month.

Although these numbers confirm the preliminary data, they illustrate the difficulties the will have bringing inflation in the Eurozone back down to its medium-term target of 2.0%.

rose 0.2% to 1.1947 after data released earlier Friday showed that U.K. rose by 0.3% month-on-month in January, above the expected 0.1%.

Signs the British economy is proving somewhat resilient could help the to decide to raise interest rates again this month.

rose 0.2% to 0.6600, rose 0.2% to 0.6114 and edged higher to 6.9660.

rose 0.1% to 18.9678, with the Turkish lira near a record low against the dollar following last month’s massive earthquakes and as the country continues the unorthodox monetary policies under President Tayyip Erdogan.

The lira lost some 30% of its value against the dollar in 2022 and 44% the year before.

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China wants weaker US dollar as reserve currency, says Biden economist nominee

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China wants weaker US dollar as reserve currency, says Biden economist nominee
© Reuters. Dr. Jared Bernstein testifies on his nomination to be Chairman of the Council of Economic Advisers during a Senate Banking, Housing and Urban Affairs Committee hearing on Capitol Hill in Washington, U.S., April 18, 2023. REUTERS/Amanda Andrade-Rhoades

WASHINGTON (Reuters) – There was “some evidence” that China wants the dollar to weaken as the international reserve currency, said a White House nominee for a top economist position on Tuesday, and he urged Congress to raise the U.S. debt ceiling to protect the dollar’s value.

Jared Bernstein, a member of the White House Council of Economic Advisers, told a Senate Banking Committee hearing on his nomination to head the body that U.S. control of the world’s reserve currency offered a number of benefits, including the ability to impose sanctions, as Washington had done on Russia over its war against Ukraine.

Asked about an essay he published in the New York Times in 2014 entitled “Dethrone King Dollar” and whether the U.S. would be better off if it were to lose that status, Bernstein told the committee, “Definitely not.”

Bernstein, who wrote the piece while serving as a senior fellow at the Center on Budget and Policy Priorities, said the essay was intended to show both the “very solid benefit” of having the world’s reserve currency, but also the costs, including the ability of China and other countries to manage their currencies to have a trade advantage.

Asked by Republican Senator Bill Haggerty where he stood now, Bernstein said, “I share your view on the importance of the dollar as the dominant reserve currency.”

Bernstein used the exchange to underscore the administration’s concerns about the looming deadline this June for Congress to raise the debt ceiling or risk default, and Republican efforts to condition that approval on budget cuts.

He said raising the debt ceiling would help maintain the dollar’s reserve currency status and protect its value. “Having that kind of kind of default out there as a political tool is antithetical to what you and I are talking about right now.”

While Bernstein did not elaborate on China, the U.S. Treasury in November found no major U.S. trading partners manipulated its exchange rates to gain unfair advantage through June 2022, but would monitor China and six other countries.

The Treasury report criticized China for not publishing foreign exchange intervention and lack of transparency around its exchange-rate mechanism. China has previously denied intervening to weaken the yuan.

Weak tax collections in April could mean the U.S. government’s deadline to raise the $31.4 trillion debt ceiling will happen sooner than expected, analysts said on Tuesday.

The Treasury Department has warned that the federal government might no longer be able to meet its financial obligations as early as June 5, while the nonpartisan Congressional Budget Office has forecast that moment would come between July and September.

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Fed’s Bowman sees potential for interbank digital dollar

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Fed's Bowman sees potential for interbank digital dollar
© Reuters. FILE PHOTO: U.S. Federal Reserve Governor Michelle Bowman gives her first public remarks as a Fed policymaker at an American Bankers Association conference in San Diego, California, U.S., February 11 2019. REUTERS/Ann Saphir

(Reuters) – A so-called “wholesale” central bank digital currency could hold promise for the future settlement of certain financial market transactions and processing international payments, Federal Reserve Governor Michelle Bowman said on Tuesday.

While a digital dollar could make sense for interbank transactions, there could be unintended consequences like disruptions to the banking system if the Fed were to design a central bank digital currency that would be directly available to the public, Bowman said in prepared remarks for an event at Georgetown University’s Psaros Center for Financial Markets and Policy.

The U.S. central bank has not yet said if it would embark on an effort to create a central bank digital currency, and has previously said it would seek authorization from Congress and the executive branch before doing so.

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Dollar edges lower; Chinese growth data boosts risk sentiment

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Dollar edges lower; Chinese growth data boosts risk sentiment

By Peter Nurse

Investing.com – The U.S. dollar slipped lower in early European trade Tuesday, handing back some of the overnight gains as healthy Chinese growth data boosted risk sentiment.

At 02:05 ET (06:05 GMT), the , which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 101.707, after rising 0.5% overnight.

China’s post-COVID recovery appears to be firmly on track, after data released earlier Tuesday showed that the second largest economy in the world in the first quarter year-on-year, beating forecasts for 4% growth, and registering a sharp acceleration from the previous quarter’s 2.9% reading.

Additionally, surged more than 10%, hitting a near two-year high, reinforcing hopes that the country’s post-pandemic recovery remains on course.

This news has boosted optimism about the global economic recovery, to the detriment of the safe-haven dollar.

The greenback had traded higher on Monday after data showed that increased for the first time in five months, lifting expectations that the will hike interest rates again at its next meeting in May.

“With the market conditions continuing to settle a little … it seems likely now that the Federal Reserve will deliver one last 25bp hike in May and then hit the pause button to wait on the effects of tighter credit conditions caused by the March banking turmoil,” said analysts at ING, in a note.

rose 0.1% to 1.0941, below the one-year high of 1.1075 it touched last week although the is widely expected to continue hiking interest rates this year with inflation still significantly higher than its inflation goal.

The ECB can discuss changing its 2% inflation goal but only after it brings down inflation to that level, President Christine Lagarde said on Monday.

rose 0.2% to 1.2392, after the rose to 3.8% in February, from 3.7%, a weaker result than expected. However, the is still expected to hike interest rates by another 25 basis points at its meeting next month with inflation remaining highly elevated.

Elsewhere, rose 0.5% to 0.6732 as the of the Reserve Bank’s recent meeting showed that the bank may yet hike interest rates further, despite a pause in April. 

fell 0.1% to 134.31, while dropped 0.1% to 6.8716, benefiting from the strong Chinese growth data.

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