In New York on June 21, the dollar strengthened against other major currencies, reaching an eight-week high against the yen. This was due to positive data reflecting a strong U.S. economy and the Federal Reserve’s cautious approach to interest rate cuts compared to other central banks.
U.S. business activity saw a slight increase to a 26-month high in June, with job growth rebounding and inflation pressures easing. This suggests that the recent slowdown in inflation may continue.
The dollar index, which measures the currency against six others, rose by 0.2% to 105.82. This increase followed rate cuts by the Swiss National Bank and hints from the Bank of England of a potential reduction in August.
Market experts believe that the stronger U.S. data may prevent a rate cut by the Fed in July. The yen’s performance will be closely monitored by forex traders in the coming week.
The U.S. Treasury recently added Japan to its list of countries being monitored for potential currency manipulation. The yen has been under pressure, particularly after the Bank of Japan decided to postpone reducing bond-buying stimulus until its July meeting.
In the UK, retail sales exceeded expectations in May, while business growth slowed in June due to uncertainties surrounding the upcoming general election on July 4.
The euro weakened slightly against the dollar following reports of contracting service-sector activity in France and slower economic activity in Germany. Election noise in France and the UK may be influencing these figures.
Overall, the market remains focused on economic data and central bank actions, with traders closely watching currency movements in response to global developments.