- USD/JPY extends its recovery as US initial jobless claims for the week ending December 27 were lower than expected.
- The Fed is expected to reduce interest rates gradually this year, as officials are confident about the US economic outlook.
- Japan’s Kato warned of intervention against excessive movements in the currency market.
The USD/JPY pair rebounds from the intraday low of 156.43 in the North American session on Thursday. The asset recovers as the US Dollar (USD) hits a new two-year high, with the Dollar Index (DXY) breaking above the 108.80 level, as initial jobless claims in the United States (US) rise. ) for the week ending December 27 were lower than projected.
The Labor Department reported that people filing for unemployment benefits for the first time were 211,000, lower than estimates of 222,000 and the previous release of 220,000, revised upward from 216,000.
The dollar was already performing well due to expectations that the Federal Reserve (Fed) will gradually reduce interest rates this year.
The pace of the Fed’s interest rate cuts in 2024 was slightly aggressive as policymakers focused more on improving labor market conditions than reducing price pressures. In the process, the Fed reduced its key lending rates by 100 basis points (bps) in the last three monetary policy meetings.
For this year, Fed officials have guided fewer interest rate cuts as they are optimistic about the United States (US) economic outlook. The latest dot plot showed that policymakers collectively see the federal funds rate heading to 3.9% by the end of the year.
Meanwhile, the Japanese Yen (JPY) is performing well against its major peers on Thursday amid concerns that the Japanese administration could intervene in the currency domain against excessive movements in the foreign exchange market. Japan’s Finance Minister Katsunobu Kato said last week that authorities are closely watching currency movements and will act to stabilize the weakened yen.
economic indicator
Weekly unemployment benefit requests
Weekly unemployment benefit applications are published by the US Department of Labor and is a measure of the number of people who have filed their first claim for unemployment insurance. In other words, it provides a measure of strength in the labor market. A higher-than-anticipated number indicates weakness in the labor market, which influences the strength and direction of U.S. economic activity. In this way, a lower than expected reading is bullish for the dollar.
Last post:
Thu Jan 02, 2025 1:30 p.m.
Frequency:
Weekly
Current:
211K
Dear:
222K
Previous:
219K
Fountain:
US Department of Labor
Every Thursday, the US Department of Labor releases the number of initial claims for unemployment benefits for the previous week in the US. Since this reading could be very volatile, investors may want to pay more attention to the average four weeks. A bearish trend is considered a sign of an improving labor market and could have a positive impact on the performance of the USD against its rivals and vice versa.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
