Tokyo
The dollar was on the defensive against most currencies on Friday after a rise in US jobless claims and a dip in Treasury yields dampened the appeal of holding the greenback.
The yuan jumped to a seven-month high against the dollar, showing that even US-Sino diplomatic tension was not enough to deter traders who are bullish on China’s economic outlook. The euro, which has been the biggest beneficiary of a recent decline in the dollar, will come into focus later on Friday as traders brace for euro zone manufacturing data.
A larger-than-expected rise in weekly US jobless claims came just one day after Fed officials warned that a recovery in hiring is starting to slow, raising doubts about how quickly the world’s largest economy will bounce back from the coronavirus.
Concern about the US economy, combined with an excess supply of dollars already in circulation due to the Fed’s massive quantitative easing, are likely to weigh on the US currency in coming weeks, analysts say.
“Sentiment for the dollar is weak, reflecting all the QE and the decline in real US yields,” said Tsutomu Soma, a credit trader at Monex Securities.
“On the flip side, the euro is strong because Europe has already put a firm backstop in place to support economic growth, which has boosted confidence in the euro and euro zone bonds.”
The dollar fell slightly to $1.1874 per euro on Friday following a 0.2 percent decline in the previous session. The British pound edged up to $1.3237, holding onto a 0.8 percent gain made on Thursday. The dollar also nursed losses against the safe harbor Swiss franc, last trading at 0.9077 on Friday.—Agencies
