U.S. dollar fell from a 20-year peak. What about Euro? 

The U.S. dollar dropped from its 20-year peak on Friday. According to a new report, the pace of hiring increased a bit more than analysts forecasted last month. As a result, the Federal Reserve now has more leeway in how much it increases interest rates at its September meeting. In August, nonfarm payrolls soared by 315,000 jobs. Meanwhile, the consensus forecast was that the report would show an additional 300,000 jobs. The actual numbers made August the 20th consecutive month of job growth in the United States, though.

On Friday, the dollar index fluctuated. It tumbled down after the jobs report hit markets but rebounded again, recovering most losses. At last, the greenback traded lower by 0.319% at 109.24. Despite that, it remained on track for its third consecutive weekly rally.

The dollar skyrocketed to a new 20-year high on Thursday. It exchanged hands at 109.99, boosted by Fed Chair Jerome Powell’s announcement. Last Friday, at the Jackson Hole symposium in Wyoming, Powell declared that the Fed needed rates to remain high for some time to fight inflation.

Edward Soya, the senior market analyst at Panda, noted that the forex market is still expecting potentially much more aggressive Federal Reserve tightening. He also added that according to the jobs report, average hourly wages are beginning to decline. That could help lessen current price pressures. While inflation is showing some signs of slowing, thus far, analysts have no strong consensus on that.

On Friday, Fed funds futures remained firm after the jobs report’s release. Investors are now pricing approximately a 75% chance that the agency will increase rates by 75 basis points in September.

How are the Euro and Sterling trading now? 

The common currency recovered some losses from Thursday’s session today. It climbed up above parity versus the greenback, soaring by 0.62% to $1.0006. The European Central Bank’s meeting is scheduled for next week. Traders expect an unprecedented 75 basis points rise from the bank.

Meanwhile, the British Pound added 0.02% against the U.S. currency, exchanging hands at $1.1546. Despite that, the sterling lowered by about 1.6% during this week. Investors are waiting for the announcement of Britain’s new prime minister on Monday. The ruling Conservative Party’s leadership contest will conclude that day, and the news could define the direction of the pound’s moves.

On Friday, the Japanese Yen plummeted versus the dollar. The latter gained 0.11% at 140.355 yen. On Thursday, the greenback had also rallied against the Japanese currency, surpassing 140 yen for the first time since 1998. After that, the yen dropped to a new low of 140.43. Japanese finance minister Shun Suzuki stated today that the country’s government would take appropriate action to help the currency.

What about the EM currencies? 

In Asia, emerging market currencies declined on Friday. Thailand’s baht shaved off 0.3%. In fact, it became the worst-performing currency during this week, losing 2.2% overall. At the same time, Malaysia’s ringgit and Indonesia’s rupiah both plummeted by 0.1%. South Korea’s won decreased by 0.2%, as well.

Furthermore, the Philippines’ peso plunged to a record low after the release of U.S. data. The peso tumbled down by 0.3%. It also remained on track to a 1.1% decline this week. The currency collapsed to 56.880 per greenback today, its lowest level ever.

ANZ analysts noted that notwithstanding the uncertainties in U.S. payroll data further out, the Asian EM market sees a combination of increasing external growth headwinds and potentially higher and longer-drawn domestic rate hiking cycle. As a result, traders will likely focus on August’s U.S. nonfarm payrolls report. This data is due later on Friday.

Meanwhile, coronavirus lockdowns and restrictions continued in China, weighing on emerging Asian markets. China is the second-largest economy worldwide, as well as the region’s biggest trading partner. Thus, it greatly influences other Asian economies. On Thursday, the country issued a lockdown in Chengdu. At the same time, Shenzhen, which is a southern technology hub, suspended large events and added its COVID restrictions.

On the other hand, South Korea’s main inflation rate lowered in August, coming in below forecasts for the first time in the last seven months. Despite that, the price data on Friday indicated that inflation would likely stay high for a while.

On Friday, Equities in Singapore lost 0.3%, while Taiwan’s benchmark index dropped by 0.4%. However, stocks in Manila and Jakarta soared by 0.6% and 0.5%, respectively.