Follow us on:   

US Dollar retreats after 13-year high
June 8, 2015, 5:00 pm

The US dipped slightly on Monday after hitting 13-year highs against the Japanese yen on strong jobs reports Friday [Xinhua]

The US dipped slightly on Monday after hitting 13-year highs against the Japanese yen on strong jobs reports Friday [Xinhua]


Currency markets were reeling on Monday following speculation that US President Barack Obama had told his counterparts at the G7 meeting in southern Germany that he feared the impact of a strong dollar on the American economy.

Although the White House denied that Obama ever made such a statement, the US dollar on Monday retreated slightly from a 13-year high against the Japanese Yen, and against the euro.

The euro also climbed more than 0.8 per cent against the greenback on Monday, rising to 1.1208 after coming in at 1.1048 on Friday.

The euro was given a boost by positive indicators from Germany, where the benchmark 10-year bund (bond) yields were higher on Monday.

US job market

The US dollar surged on Friday following a better-than-expected US Department of Labor report on the job market.

The US economy added 285,000 jobs in May, the Department reported, beating market expectations of 222,000 jobs.

Although the unemployment rate rose from 5.4 to 5.5 per cent, the high number of added jobs in May appeared to indicate that the economy was back on momentum after disappointing first quarter GDP growth.

The US economy shrunk by 0.7 per cent in the first quarter, largely due to a slowing attributed to heavy snowfall, analysts said.

However, the predicted GDP growth for the second quarter is a lukewarm 2 per cent, the slowest rate of growth since 2011.

All eyes are now on the US Federal Reserve which has been itching to raise interest rates following the termination of its stimulus quantitative easing program last summer.

Many market analysts believe that keeping interest rates at near-zero levels is no longer feasible and that the Fed will likely announce a hike this coming September.

Meanwhile, European stocks dipped slightly on concerns that the impasse between the leftist Greek government and its IMF and European Central Bank creditors is likely to continue, with little chance of an agreement to be reached by the June 30 deadline.

The pan-European FTSEurofirst 300 index fell 0.7 per cent in early Monday trading.

The BRICS POST with inputs from Agencies