Dollar climbs versus yen as investors await US jobs data
Market Movements and Investor Sentiment
By Chibuike Oguh and Samuel Indyk
NEW YORK/LONDON, Aug 6 (Reuters) - The U.S. dollar rose against the Japanese yen on Thursday, helped by safe-haven positioning from investors awaiting details on a proposed deal to end the Iran conflict and ahead of Friday's monthly U.S. jobs report.
The dollar has clawed back some recent intervention-driven losses that had pushed it to a 13-week low against the yen following joint action by Japanese and U.S. Treasury authorities to prop up the Japanese currency.
The dollar was last up 0.44% against the yen at 158.45, for its third straight session of gains after falling to 155.20 on Monday, lowest since early May.
Investor Reactions and Analyst Commentary
"The idea that maybe there's some good news on a ceasefire or a deal in the Persian Gulf has taken some of the dollar premium off with lower oil prices and so forth. It's very quiet today because I think the markets are waiting for what happens with non-farm payrolls on Friday," said John Velis, FX and macro strategist at BNY.
The euro was down about 0.28% at $1.1521 and sterling fell 0.15% at $1.34485.
The dollar index, which tracks the U.S. currency against six major peers, was up 0.31% at 99.97 after it hit a six-week low on Monday.
Geopolitical Factors Affecting Currency Markets
Eyes on Gulf Tensions
Tensions continued to play out in the Gulf after Reuters reported a proposed deal between Iran and Oman to help end the U.S.-Iran conflict could give Tehran control over inbound traffic through the Strait of Hormuz.
The U.S. did not immediately comment on the proposal. President Donald Trump has said that a deal to reopen the strait was imminent, but U.S. officials have repeatedly insisted that they would never agree to Iranian control of access to the world's most important trade route for energy supplies.
Brent crude rose 3.8% to settle at $82.49 a barrel, although prices remain well below the almost $100-per-barrel level hit in July when attacks resumed following a brief détente.
Speculators have amassed a near-record net dollar long position in aggregate compared with other major currencies, "leaving positioning prone to a squeeze in the event of dollar-negative developments," Scotiabank's Shaun Osborne said in a note, citing U.S. Commodity Futures Trading Commission data.
Federal Reserve Outlook and Economic Data
Fed Direction May Depend on Payrolls
Friday's U.S. employment report for July could provide more clues on the Federal Reserve's interest-rate path. The U.S. service sector remained strong in July while services-sector employment slowed.
A divided U.S. central bank left rates unchanged last month but Fed Chairman Kevin Warsh said he was committed to bring inflation down, leaving the door open to a possible rate hike in September.
"Any data release after the Fed meeting in July is just very important," said Francesco Pesole, an FX strategist at ING. "Tomorrow's payrolls could be pretty big for dollar-yen. If it's a hot print then you would probably start to see a new build up of speculative longs on dollar-yen."
U.S. nonfarm payrolls are forecast to have risen by 80,000 last month after an increase of 57,000 in June, according to a Reuters survey of economists. The unemployment rate is expected to hold steady at 4.2%.
Fed Governor Lisa Cook said on Wednesday that she was open to the idea of raising short-term interest rates to deal with levels of inflation that are "too high."
San Francisco Fed President Mary Daly said she was "completely supportive" of last week's decision to hold rates steady, saying more data is needed before the central bank's September 15-16 meeting.
(Reporting by Chibuike Oguh in New York and Samuel Indyk in London; Editing by Paul Simao)
