Dollar looks resilient despite Beige Book, weekly jobless claims eyed
September 7th - After yesterday’s marked run of gains by the dollar on the back of concerns over wage inflation we did see a small retracement after the Fed’s Beige Book was released, although this held few surprises compared with what the market was expecting to see. The dollar gave back some of its gains after this renewed threat of an economic slowdown but essentially many traders still seem to feel that the greenback is looking a little undervalued although a rise in weekly jobless claims could again reverse this. The Yen however is managing to look quite resilient despite some lacklustre economic data released from Japan overnight. As was expected, the leading indicators pointed towards economic contraction in the six months to come, but the fact that this is being seen after just one rate hike by the BoJ is really underlining the fact that yields on Yen deposits look set to remain unfavourable for some time yet. Tomorrow’s monthly report by the central bank will therefore make interesting reading, especially with regard as to precisely when they feel another tightening of monetary policy may now occur. USD/JPY is sitting in that 116.50-117 range but with little else due out of Japan it’s more likely going to be fundamentals from the US or China that stand to provide any further direction here, at least in the short term.
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