Singapore, Feb. 6 (BNA): The dollar held steady on Monday after a strong US jobs report suggested the Federal Reserve could remain hawkish for longer, while the yen was hurt by news that Bank of Japan Deputy Governor Masayoshi Amamiya was questioned. . to be the next ruler.
The Nikkei newspaper reported, citing anonymous government and ruling party sources, that Prime Minister Fumio Kishida’s administration was in the final stages of deciding on a successor to current governor Haruhiko Kuroda along with two new deputy governors, Reuters reports.
At a press conference on Monday, Deputy Chief Cabinet Secretary Yoshihiko Isozaki said the Nikkei report was untrue.
The yen fell 0.42% to 131.75 per dollar, after touching a three-week low of 132.60 earlier in the session.
“Amamiya has helped Kuroda since 2013 with monetary policies, and is considered the most pessimistic of the two contenders, which dispels hopes that the policy normalization of the Bank of Japan can advance under the new president,” said strategists at Saxo Markets.
The Bank of Japan’s loose policy settings have drawn growing criticism from many quarters, including opposition politicians and traders, for distorting market function.
Amamiya played a key role in formulating the Kuroda asset purchase program in 2013 and has consistently advocated maintaining ultra-low interest rates. But he also said in July that the BoJ should “always” consider ways out of ultra-loose monetary policy.
On Friday, the closely watched US employment report from the US Department of Labor showed that non-farm payrolls rose by 517,000 jobs last month. Economists polled by Reuters had expected a gain of 185,000.
The dollar crossed higher and stabilized on Monday. Against a basket of currencies, the greenback touched its highest level in nearly 4 weeks at 103.22 and was last at 103.03. The index had risen 1.1 percent on Friday.
The Federal Reserve on Wednesday raised interest rates by 25 basis points and said it had turned a corner in the fight against inflation, prompting investors to price in a more pessimistic path ahead.
But the impressive number of jobs combined with the rebound in the US service industry in January made investors suspect that the Federal Reserve was almost done with monetary tightening.
“The concern, of course, is that much better-than-expected data is bad news if the Fed sees this as strengthening its case for two more hikes and keeping interest rates higher for longer,” said Tapas Strickland, head of market economics at the National Australia Bank.
Citi strategists said Fed Chairman Jerome Powell and the broader committee are increasingly excited about the possibility of a “soft landing” in which inflation fades despite the resilience of the labor market.
But Friday’s report, Citi said, should make the Fed more concerned that labor markets are too tight to match its inflation target.
Traders price the Fed’s policy rate to peak at 5.05% in June before the central bank cuts rates in the second half of the year.
The strengthening of the safe-haven dollar also led to an escalation of tensions between the US and China after a US military fighter jet shot down a suspected Chinese spy balloon off the coast of South Carolina on Saturday.
The euro rose 0.02% to $1.0795. The single European currency fell 1% on Friday, touching a three-week low of $1.07815 earlier in the session.
Sterling last hit $1.2057, up 0.05% on the day, after touching a one-month low of $1.2031 earlier on Monday.
The Australian dollar rose 0.36% to $0.694, while the New Zealand dollar fell 0.08% to $0.633.