SINGAPORE The hawkish words of Federal Reserve speakers and the fact that investors were looking to a key jobs report later in the day for clues about how much more U.S. rates would need to go up helped the dollar keep its strong overnight gains on Friday.
Overnight, the rising dollar broke through the key 145 level against the Japanese yen again. In Asia trade, it stayed close to that level. The pound and the euro, on the other hand, continued to lose value after sharp drops overnight.
Related: rupee keeps making gains against the dollar.
At $1.1170, sterling was up 0.09% after falling 1.4% overnight. It went up to a high of $1.1493 early in the week after the British government changed its mind about cutting the highest income tax rate.
After two failed attempts this week to get back to parity, the euro went up by 0.09% to $0.98015.
Overnight, a number of Fed officials backed up the idea that the central bank isn’t close to done raising rates as it tries to lower inflation and that rates are likely to go up even more.
Rodrigo Catril, a currency strategist at National Australia Bank, said, “The hawkish message from Fed speakers has been very clear” (OTC:NABZY).
“That proved again that the Fed is still very committed to keeping its foot on the tightening pedal, and at the same time, if you look at economic data, the U.S. still looks much stronger than other countries.”
The U.S. dollar index got stronger and went up to 112.22. It had been at a low of 110.05 earlier in the week.
All eyes are now on the U.S. nonfarm payrolls report, which is due out later on Friday. Economists think that 250,000 jobs were added last month, which is less than the 315,000 jobs that were added in August.
The last price of the yen per dollar was 145.02, which is close to its 24-year low of 145.90, which was reached last month and caused the Japanese government to step in to help the weak currency.
“We’ve been saying for a long time that an intervention is not a good way to change the trend of a currency,” said Catril. “We think that a new intervention will be triggered by a sudden, big drop in the value of the yen.”
Also stuck near their multi-year lows were the currencies of Australia and New Zealand. The Aussie was down 0.06% at $0.6407 after falling 1.2% overnight, and the kiwi was down 0.09% at $0.5650 after falling 1.6% overnight.
Related: The rupee is continuing to climb against the dollar
But the kiwi was still on track for its first weekly gain since August. This was helped by the Reserve Bank of New Zealand, which was also hawkish and raised the official cash rate by 50 basis points on Wednesday and said there would be more to come.
Accounts of the European Central Bank’s September meeting show that policymakers were getting more worried that high inflation could become permanent, which would make aggressive policy tightening necessary even if it hurts growth. This is another sign that the big central banks’ fight against inflation is far from over.