The U.S. dollar fell on Tuesday after earlier hitting a nearly five-month high following a new report showing U.S. job openings stuck at higher levels in February.
The Japanese yen was last up at 151.605 per dollar, after earlier falling to 151.79. The yen has traded in a tight range since hitting a 34-year low of 151.975 on Wednesday, prompting Japan to step up warnings of intervention.
The dollar index rose to 105.1 on Tuesday, the highest level since November 14, and added sharp gains on Monday after US data unexpectedly showed the first increase in the manufacturing sector since September 2022, prompting traders to trim interest rate expectations.
The dollar index last stood at 104.81, down 0.181%, after a Labor Department report showed job openings rose to 8.756 million on the last day of February, slightly more than expected, while traders also processed an increase in factor orders in February.
The Commerce Department’s Census Bureau said Tuesday that new orders for U.S. manufacturing goods picked up more than expected in February, boosted by demand for machinery and commercial aircraft as production restarts.
Monday’s US ISM Manufacturing Survey data showed a sharp rise in a measure of industry prices, raising investor concerns that inflation will slowly fall to 2%, triggering the first Federal Reserve interest rate cuts will be delayed, became even greater.
“Over the last nine months, the dollar has really been driven by Fed policy expectations — when the likelihood of a rate cut increases earlier, the dollar tends to weaken, and vice versa,” said John Velis, U.S. macro strategist at BNY Mellon.
Fed Chairman Jerome Powell said Friday the central bank was in no rush to cut borrowing costs after data showed a key measure of inflation rose slightly in February.
On Tuesday, Japanese Finance Minister Shunichi Suzuki reiterated that he would not rule out options to respond to disorderly currency movements.
Japanese authorities intervened in 2022 as the yen slid to a 32-year low of 152 against the dollar.
The yen’s decline comes despite the Bank of Japan’s first rate hike since 2007 last month, with officials cautious about further tightening amid a fragile exit from decades of deflation.
“The fact that they didn’t do that last week suggests to me that it’s going to take a break above 152 for Japanese policymakers to start getting involved, and in retrospect I think that might be wise of them, because intervention happens every time you enter the market, it loses significance,” said Matt Weller, head of market research at StoneX.
Still, officials are “wary of backing themselves into a corner by drawing a line in the sand at 152,” said Nicholas Chia, Asia macro strategist at Standard Chartered.
“The motivations for clamping down and intervening in the FX markets are mainly to buy time for the JPY in the hope that the USD loses strength and retreats,” he said.
Elsewhere, China’s yuan fell to a 4.5-month low as a strong dollar offset selling of the US currency by state-owned banks. The yuan fell to a low of 7.2364 per dollar on the day, its weakest level since mid-November.
The euro fell to its lowest since mid-February at the end of the Asian session, but has recently been higher at $1.0763. Data on Tuesday showed the eurozone factory downturn worsened again in March.
Sterling rose to $1.2569 from its lowest since December after data showed the manufacturing sector improved last month.
Bitcoin fell 5.36% to $66,027, after previously falling as low as $64,550.
The Swiss franc reached its lowest point since early November at 0.909 against the dollar. It has fallen about 2.5% since the Swiss National Bank unexpectedly cut rates on March 21.
