US Dollar finishes week higher against most rivals
New York (Sept 12) The U.S. dollar hovered just below its latest 6-year record against the yen Friday afternoon, capping a week in which it rose 2.11% against the Japanese currency, a massive move in the currency market.
The growing gulf between the U.S. economic recovery and Japan’s is the primary driver behind the currency’s rally, according to several analysts. The U.S. recovery appears to be progressing steadily, while Japan’s recovery has struggled since the Japanese government raised its sales tax in April.
Speculation that the Fed, during its meeting next week, could adopt a more hawkish tone in its comments about when it plans to increase interest rates has also influenced the dollar’s rise.
Retail sales data released Friday also helped the currency finish the week strong.
The dollar remained stronger against most of its rivals. The euro EURUSD, +0.22% recovered from massive losses earlier in the week to finish flat against the dollar Friday, while the pound GBPUSD, +0.03% lost 0.45% against the dollar during the past week.
The dollar reached a fresh record against the yen for the fifth consecutive trading day Friday, rising to 107.3960 yen during the Asia trading day, before retreating slightly. The dollar USDJPY, +0.27% traded at ¥107.33 Friday during the New York trading day, compared with ¥107.06 late Thursday.
The Australian dollar, one of the highest-yielding currencies in the G-10, tanked against the dollar this week, finishing down 3.6%.
It AUDUSD, -0.62% continued its selloff Friday afternoon, trading at 90.42 cents, just above its lowest point against the dollar since late March. The aussie traded at 91.03 cents late Thursday.
Boris Schlossberg, managing director of FX strategy at BK Asset Management, believes that the aussie has become “grossly oversold.” The currency has continued to decline despite data showing 230,000 new jobs have been created in Australia this year, the strongest growth figure in the past three years.
Many analysts blame the aussie’s depreciation on the rapid decline in the price of iron ore, which recently reached a five-year low. Australia is one of the world’s largest exporters of iron ore, and the country’s gross domestic product is largely dependent on mining.
The WSJ Dollar Index BUXX, +0.10% a measure of the greenback’s strength against a basket of rival currencies, rose 0.60% this past week to 76.32 Friday afternoon.