Dollar falls as yen heads for first weekly decline in six By Reuters

By Hannah Lang

NEW YORK (Reuters) – The dollar fell to its highest level in a week against other major currencies on Friday, capping a turbulent few days as traders digested a drop in U.S. jobless claims and the prospect of an economic recession that looms.

The U.S. currency fell against the Japanese yen after a three-day rally as firmer-than-expected jobs data on Thursday prompted a reduction in bets for Federal Reserve interest rate cuts later this year.

The yen and the Swiss franc – another safe-haven currency – remained near one-week lows as major stock markets rose and Treasury yields fell.

Markets endured a chaotic week, largely triggered by surprisingly weak US payrolls figures a week ago that sent global shares lower, while demand for safe-haven assets such as the yen and franc saw these currencies to reach the highest level from the beginning. of the year Monday.

The dollar was last down 0.39% at 146.675 yen, but is still on course for its first weekly gain in six weeks.

“There has been a major market desire to finally use the yen as a complete source of refuge for the chaos and conflict unfolding around the world,” said Juan Perez, director of trading at Monex USA in Washington.

which measures the currency against six others, fell 0.136 percent to 103.14 after three days of gains.

Against the Swiss franc, it fell 0.18% to 0.865 francs, but still on track for a weekly advance.

“The prospect of a purely risk-on, pro-carry environment for FX for the second half of this year is much less exciting given that our forecasts are more conservative for USD/JPY and EUR/CHF,” said UBS. FX Strategist Yvan Berthoux.

“We don’t expect a more significant relaxation to come. In this environment, the decline was quite clear.”

Data on Thursday showed the number of Americans filing new claims for jobless benefits fell more than expected last week, calming fears that the labor market is unraveling and reinforcing that a gradual easing remains intact.

The odds that the Fed will cut interest rates by 50 basis points at its next policy meeting on September 17-18 fell to 52% from 69% a day earlier, with a 25 basis point cut considered now as having a 49% probability. according to CME Group’s (NASDAQ:) FedWatch tool.

DEFINITION OF SHORT YEN EFFECTIVE?

The yen rose this month, hitting its strongest since Jan. 2 at 141.675 per dollar on Monday as a deleveraging of short positions snowballed after a surprise Bank of Japan rate hike amid weak indicators US economy.

Figures from the US Commodity Futures Trading Commission will give a clearer indication later on Friday of the extent of yen buying that has taken place.

The euro was steady at $1.0919, but little changed from a week ago. On Monday, it rose to $1.1009 for the first time since January 2.

Sterling rose to $1.2756 after a 0.5% gain overnight that brought it back from a more than one-month low.

The value fell 0.29% to $0.657, while the New Zealand dollar touched a three-week high of $0.6035 before retreating. The last one was at 0.5998.