The dollar pushed the yen further down on Thursday after highlighting the strength of the U.S. economy, which necessitates keeping interest rates elevated for a longer period, while the Bank of Japan (central bank) struggles to maintain its ultra-loose monetary policy stance. The Australian dollar plummeted following an unexpected drop in the employment rate in the country in July, while the unemployment rate rose more than expected. The Australian dollar fell by about one percent after the data release, also impacting its New Zealand counterpart.
The Japanese yen recorded 146.565 against the dollar in early Asian trading, marking its lowest level since November due to renewed pressures from the interest rate differentials between the U.S. and Japan. Although most money markets expect the Federal Reserve (the U.S. central bank) to keep interest rates unchanged in September, with some betting that the bank has already completed its tightening cycle, a series of strong economic data recently has bolstered the view that interest rates will remain at restrictive levels for a while.
Data released on Wednesday showed a surge in single-family home construction in the U.S. in July and an increase in future building permits, while an independent report indicated a surprising recovery in U.S. manufacturing output last month. The euro dipped 0.07 percent to 1.08695 dollars, while the British pound fell 0.1 percent to 1.27195 dollars. The Australian dollar lost 0.9 percent, reaching 0.6365 dollars after the employment data was released, while its New Zealand counterpart dropped more than 0.5 percent to 0.5903 dollars.
The yuan in offshore trading hit a nine-month low again at 7.3470 against the dollar. The dollar index reached its highest level in two months at 103.59.
