On Friday, the US dollar showed significant strengthening against most major currencies, ending several unstable days. Traders and analysts continued to assess the data on new unemployment claims in the US and discuss the potential impact on future economic policy.

The American currency weakened against the Japanese yen after a three-day rise. This increase was driven by stronger-than-expected employment data, which, in turn, reduced expectations for a Federal Reserve rate cut in the near future. The reduction in rate cut expectations put pressure on the dollar, which also lost ground against the Swiss franc, another safe-haven currency.

Earlier in the week, markets experienced tense moments due to unexpectedly weak US employment figures, which led to a drop in global stocks. This heightened demand for safe-haven assets like the yen and franc, which reached their highest levels since the beginning of the year. As a result, the dollar fell to 146.675 yen, although it is still on track for its first weekly gain in the past six weeks.

Juan Perez, Trading Director at Monex USA, noted, “The market clearly showed a preference for using the yen as a safe haven amid global economic and political chaos.”

The US Dollar Index, which tracks its performance against six major currencies, fell by 0.136% to 103.14 after three days of gains. The dollar also dropped by 0.18% against the Swiss franc, reaching 0.865 francs. Despite this, it is still on track for a weekly gain.

Ivan Bertou, a currency strategist at UBS, pointed out, “The prospects for creating a risk environment in the currency markets in the second half of the year are less appealing, considering our more conservative forecasts for USD/JPY and EUR/CHF.” He added, “We do not expect significant weakening under current conditions.”

The number of new unemployment claims in the US decreased more than expected last week, easing concerns about a potential deterioration in the labor market. This reinforced the view that a gradual easing of Federal Reserve monetary policy will continue. The likelihood of a 50 basis point rate cut at the Fed meeting on September 17-18 decreased to 52% from 69% previously, while the probability of a 25 basis point cut increased to 49%, according to CME Group’s FedWatch tool.

Under current conditions, the yen reached its strongest level against the dollar since January 2, climbing to 141.675 yen per dollar. This was driven by increased short positions and an unexpected rate hike by the Bank of Japan amid weak US economic data. Data from the US Commodity Futures Trading Commission, which will be released later on Friday, is expected to provide a clearer picture of the scale of yen buying.

The euro traded at $1.0919, showing little change from the previous week, although on Monday it reached $1.1009, its highest level since the beginning of the year. The British pound rose to $1.2756 following a 0.5% overnight rally, allowing it to bounce back from a more than month-long low. The Australian dollar fell by 0.29% to $0.657, while the New Zealand dollar reached a three-week high of $0.6035 before retreating slightly to $0.5998.