The dollar rose against the yen for a third straight session on Thursday, helped by safe-haven flows tied to a possible Iran deal and caution ahead of Friday's U.S. jobs report. Traders are also watching a proposed Iran-Oman deal over the Strait of Hormuz and weighing what July payrolls data means for the Federal Reserve's next move.
The dollar climbed against the yen for a third straight session on Thursday, gaining 0.41% to 158.41 yen as safe-haven positioning built ahead of a possible Iran deal and Friday's U.S. jobs report. The move claws back part of a slide that had driven the pair to a 13-week low after Japanese and U.S. Treasury authorities intervened to prop up the yen. It had weakened to as low as 155.20 on Monday, its lowest level since early May.
BNY strategist John Velis said the yen's early-week strength was the main driver behind the dollar's slide, and that hopes for a Gulf ceasefire have taken some of the dollar's safe-haven premium off as oil prices eased. He added that markets are largely holding off on bigger moves until Friday's payrolls data.
The euro slipped about 0.29% to $1.1519 and sterling eased 0.12% to $1.3454 as the dollar firmed broadly.
Gulf ceasefire talks keep traders on edge
Markets are also watching developments in the Gulf, after Reuters reported a proposed deal between Iran and Oman that could give Tehran control over inbound traffic through the Strait of Hormuz. President Trump said a deal to reopen the strait was imminent, but U.S. officials have repeatedly said they would never accept Iranian control of the waterway, and Washington has not yet commented officially on the proposal.
Meanwhile, Brent crude rose 3.42% to around $82 a barrel, still well below the nearly $100 a barrel level hit in July when Iran-U.S. tensions flared.
Payrolls data could set the Fed's next move
Attention now turns to Friday's U.S. employment report for July, which could offer fresh clues on the Federal Reserve's rate path. The services sector stayed strong in July even as services-sector employment growth slowed, and economists surveyed by Reuters expect nonfarm payrolls to rise by 80,000 last month, after a 57,000 increase in June, with the unemployment rate forecast to hold steady at 4.2%.
According to Reuters: "Any data release after the Fed meeting in July is just very important," said Francesco Pesole, an FX strategist at ING. He added that a hot print would probably fuel fresh speculative buying of the dollar against the yen.
The Fed left interest rates unchanged last month, but Chairman Kevin Warsh reaffirmed his commitment to bringing down inflation, leaving the door open to a possible rate hike in September.
Its broader measure, the dollar index, rose 0.32% to 99.98, rebounding after touching a six-week low on Monday.
Source: Reuters
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