The US dollar drops on the cut outlook rate; Yen came down in the midst of political uncertainty in Japan
The US dollar dropped on Monday, extending the loss after a weak US job report on Friday which strengthened the expectations of federal reserves this month, while Yen fell widely after Japanese Prime Minister Shigeru Ishiba announced his resignation over the weekend.
The focus for the market will also be on the voting of French Prime Minister Francois Bayrou in the future, which is expected to disappear. The announcement of the voting, called Bayrou himself, has plunged the second largest economy of the euro zone deeper into the political crisis.
In Japan, Ishiba said on Sunday he would resign, delivering in the period of uncertainty of policy that was long potential for the fourth largest economy in the world, the most owed industrial country.
It pushed the lower yen on all boards and in the middle of the morning trading, the dollar only rose 0.2% against the Japanese currency at 147,695 after an increase of 0.8% on that day.
The Japanese currency also drove to the lowest in more than a year against Euro, which rose 0.3% on the day to 173.25 yen.
But the market attention remains strongly pinned on the US dollar after a non-agricultural salary shock on Friday that all of them strengthened Fed’s cutting rates at the policy meeting at the end of this month.
“The driving force in the foreign exchange market remains a dollar and US development,” said Marc Chandler, head of market strategy, at Bannockburn Forex in New York.
“People can talk about Japanese politics, but the actual driver of the dollar/yen is not Japanese politics, or Japanese interest rates. This is a US interest rate, and with a market price of around 10% of the chance of cutting 50 basis points, the dollar dropped.”
Fed Futures funds are price determination in 90% of the chances of cutting the standard 25 basis points this month and the chance of 10% decreases in the 50-BP level, according to the estimated LSEG.
The Payrolls Non -Agricultural Report shows the growth of US work plummeted in August and the unemployment rate increased to almost four years 4.3%.
The future of Japanese politics
Investors focus on the opportunity for Ishiba who was replaced by a more loose supporter of fiscal and monetary policy, such as the Liberal Democratic Democratic Veterans Sanae Takaichi, who criticized the increase in the interest rates of the Bank of Japan.
“The probability of an additional interest rate increase in September was never seen to be high to start, and September is likely to be waiting-and-seeing,” Hirofumi Suzuki, head of the currency strategy expert at SMBC, said about the next Boj’s move.
“However, starting October and so on, some will depend on the next prime minister, so the situation must be alive.”
Japanese shares jumped while the Government Bonds (JGB) were stable, although the results at JGB were super long floating near the highest record.
Yen almost did not react to data on Monday which shows the Japanese economy developed faster than those estimated in the second quarter.
In other currency pairs, Sterling rose 0.2% against the dollar to $ 1,3534, after rising more than 0.5% on Friday, while Euro rose 0.2% to $ 1,1741, after reaching the liver for more than one month on Friday.
The dollar index rose down 0.3% to 97.6, after falling more than 0.5% on Friday.
Against the Swiss franc, the dollar fell to the lowest since July 24, and finally dropped 0.5% at 0.7938.
“(Payrolls Report) has caused the dollar index to fall back under support at the 98,000 level even though the negative impact on the US dollar is simpler than the decrease in US short -term results,” said the MUFG currency strategy expert, Lee Hardman in a note on Monday.
Also last Friday, the Minister of Finance US Scott Besent called for a new supervision of FED, including its strength to determine interest rates, because Trump’s administration intensified his efforts to control the central bank.
President Donald Trump is considering three finalists to replace Fed Chair Jerome Powell, which he has criticized throughout the year for not cutting the tariff as he demanded.
Elsewhere, the Australian dollar and New Zealand respectively rose 0.5% to $ 0.6585 and $ 0.5926, respectively.
Currency Offer Price on September 8 02:31 PM GMT
Source: Reuters (reporting by Amanda Cooper in London and Gerrtrude Chavez-Dreyfuss in New York; additional reporting by Rae Wee in Singapore; editing by Jamie Freed, Jacqueline Wong, Hugh Lawson, Haikrishnan Nair and Franklin Paul)
