Dollar Rises as Jobless Data Lift Sentiment Before Fed Decision

September 17, 2015 Bloomberg

By Lananh Nguyen

The dollar climbed for a third day against the yen as a drop in weekly jobless claims underscored a resilient U.S. labor market before Federal Reserve policy makers decide on interest-rate policy.

The U.S. currency was split between gains and losses versus other major peers as participants held off on taking big bets before the central bank decides whether to increase interest rates for the first time since 2006. Futures show traders expect the Federal Open Market Committee will hold off, even as almost one-half of economists in a Bloomberg survey predict the Fed won’t wait any longer to start monetary tightening.

“Solid U.S. data and the recent stabilization in risk sentiment mean the market has to respect the possibility that the Fed could finally get its foot out of the fire and lift off,” Matt Derr, a foreign-exchange strategist at Credit Suisse Group AG in New York, said by e-mail.

The dollar climbed 0.3 percent to 120.92 yen as of 11:37 a.m. in New York. It was 0.2 percent lower at $1.1307 per euro. The Bloomberg Dollar Spot Index was little changed at 1,202.11.

Fed watch

“Pretty much every trader on the planet is waiting on tenterhooks for that announcement, so right now, no major positions are being taken,” said Karl Schamotta, director of foreign-exchange research and strategy in Toronto at Cambridge Global Payments, which hedges currencies for companies.

The company has seen increased activity in the options market as investors looked to buy or sell insurance at key currency levels, such as the euro at $1.15 and $1.12, Schamotta said.

Initial jobless claims in the U.S. declined last week to the lowest level in two months, a Labor Department report showed Thursday. Applications for unemployment benefits decreased by 11,000 to 264,000 in the week ended Sept. 12.

The dollar has added 7.7 percent this year, the second-best performer behind the Swiss franc among 10 developed-nation counterparts, according to Bloomberg Correlation-Weight Indexes. The yen has gained 6.5 percent while the euro is little changed.

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