The dollar snapped a two-week losing streak on Monday as oil's jump on Iran tensions drove safe-haven demand. The yen bore the brunt, slipping nearly 1% against the dollar and giving back more of the ground it won from last month's currency intervention, with USD/JPY trading at 159.26.
USD/JPY rose 0.9% to 159.26 on Monday, with the yen giving up more of the gains it made after last month's joint currency intervention. The move came as the dollar broadly rebounded, snapping a two-week losing streak.
Yen gives up more intervention gains
The yen has now surrendered a chunk of the gains it made against the dollar since Washington and Japan carried out a landmark joint yen-buying intervention last month, the first such action since 2011. Before that intervention, the yen had slid to a forty-year trough against the dollar at 164, a level that pressures Japan's import-heavy economy. Japanese financial markets will stay closed Tuesday for a national holiday.
Oil's surge fuels the dollar's safe-haven bid
Elsewhere, oil prices rose nearly 5% on Monday after Iran ruled out direct talks with the U.S. and said a full reopening of the Strait of Hormuz would only follow Washington meeting certain conditions. Traders moved into the dollar's safe-haven role as a result, pushing the U.S. dollar index up 0.3% to 99.82, a gauge that had declined nearly 2% over the prior two weeks.
Jobs data recasts the Fed's rate hike outlook
The dollar's rebound follows a 0.4% drop on Friday after data showed the first monthly decline in U.S. nonfarm payrolls since February, driven mainly by a fall in local government education jobs. Payrolls for May and June were also collectively revised lower by 103,000.
Traders responded by paring their expectations for a Fed rate increase in September. Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management, said the weaker labor report likely "gives policymakers some breathing room to keep interest rates steady". Markets now turn to this week's July inflation readings, with the consumer price index due Wednesday and the producer price index due Thursday, followed by July retail sales on Friday.
Source: Investing.com
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