MW: Dollar pulls back after tapping 9-month high against Japanese yen
The dollar hit a fresh nine-month high against the Japanese yen on Thursday before losing some of its momentum gained from upbeat U.S. economic data and a deal reached by global oil producers to cut output.
Solid manufacturing data from China added to the upbeat news for investors, fueling demand for dollars, though some economists said the U.S. currency might be nearing a sweet spot for profit-taking.
The WSJ Dollar Index BUXX, -0.32% , a measure of the U.S. dollar against a basket of major currencies, was down 0.32% at 91.68. The ICE U.S. dollar index DXY, -0.33% , which measures the greenback against a half-dozen rivals, fell 0.34% to 101.18.
–– ADVERTISEMENT ––
Dollar-yen USDJPY, -0.09% fell to ÂĄ114.23, after touching as high as ÂĄ114.83 earlier Thursday, to mark its highest level since Feb. 16. The dollar was trading at ÂĄ114.45 late Wednesday in New York.
The euro EURUSD, +0.3683% rose to $1.0631 from $1.0589 late Wednesday. The pound GBPUSD, +1.1594% was fetching $1.2639 compared to $1.2506 late Wednesday, nearing a two-week high.
After upbeat U.S. private-sector hiring data Wednesday, “it seems expectations for [Friday’s] U.S. jobs data have grown,” said Mizuho Securities FX strategist Kenji Yoshii.
Commodities market action also played into currency dealings. The Wednesday deal by the 14-nation Organization of the Petroleum Exporting Countries to cut oil output also strengthened market sentiment, propelling crude prices more than 8% after months of wrangling and uncertainty about the ability of the once-mighty group to strike an agreement. The OPEC cuts were deeper than many analysts had expected, amounting to about 1% of global production. Crude trading did turn choppy by Thursday.
Still, the dollar was struggling to stay above ¥114.50, let alone breach ¥115, with the rapid pace of gains for the currency — more than 12% since the U.S. election — giving some investors pause to cash in profits.
“The dollar has already reached a sweet spot,” making it ripe for selling, said Yoshii, adding that more data such as the U.S. ISM manufacturing report and the jobs data would determine whether the ongoing appetite for risk-taking would persist and whether the dollar’s gains were sustainable.
See: MarketWatch’s economic calendar
As the greenback came off its highs, the release of better-than-expected Chinese manufacturing data offered support for the dollar. An official gauge of China’s factory activity rose for a second straight month in November, adding to recent signs of strength in the world’s second-largest economy. China’s official manufacturing purchasing managers’ index increased to 51.7 from October’s 51.2.
