The US dollar held steady near its two-month high on Monday after a strong US jobs report bolstered investor expectations that the US Federal Reserve would raise interest rates this year, while the yen fell further into intervention territory.
Currency movements were largely limited compared to the broader market, as a sharp sell-off swept through technology stocks in Asia, and the dollar maintained its strong gains following the report, which showed a larger-than-expected increase of 172,000 non-farm jobs last month.
The euro fell against the dollar to a two-month low of $1.1507, while the British pound reached a three-week low of $1.33165, according to Reuters.
The Australian and New Zealand dollars similarly dropped to two-month lows of $0.7016 and $0.5779, respectively.
Jonas Goltermann, Senior Markets Economist at Capital Economics, stated: “The US jobs report paints a picture of a US labor market that is improving despite the current energy price shock.”
US Interest Rate
He added: “This situation makes a tightening of monetary policy by the US Federal Reserve later this year increasingly likely, and we now expect the Federal Open Market Committee to raise interest rates twice by 25 basis points later this year, in response to the energy supply shock and the accelerating recovery of the US labor market.”
Israel stated that it bombed military targets in western and central Iran on Monday, even after reports indicated that US President Donald Trump had asked Israeli Prime Minister Benjamin Netanyahu to refrain from further attacks.
According to CME Group’s FedWatch tool, markets now anticipate a greater than 70% probability that the Federal Reserve will raise interest rates next December, a sharp increase from 45% a week ago.
Japanese Yen
The dollar’s rise, in turn, led to a further decline in the yen, reaching 160.33 per dollar. The yen erased gains made after Tokyo’s intervention, injecting 11.7 trillion yen ($73.01 billion) just over a month ago, when it had fallen to its lowest level since July 2024 at 160.725 per dollar.
Sources told Reuters that the Bank of Japan is expected to raise interest rates this month unless a sharp escalation in the Middle East conflict destabilizes markets, as rising fuel prices resulting from the energy crisis exacerbate price pressures on the economy.
For cryptocurrencies, Bitcoin rose by more than 1% to $62.61 thousand, recovering after falling to its lowest level since October 2024 last week. Ether’s price also increased by more than 1% to $1652.23, after it dropped to a 14-month low last week.