Worries that Britain could vote to leave the European Union in two weeks' time spread across the currency market on Friday, with the safe-haven yen hitting an eight-week high as investors ditched riskier assets for safety.
The dollar has been pounded in recent days as expectations about a July Fed rate hike receded. Today, however, the greenback found good support against certain currencies, especially the euro, which fell across the board. Despite the delay in the potential rate rise, the Fed remains the only major central bank looking to tighten its policy. In contrast, most other central banks are still very much dovish, including the European Central Bank, Bank of Japan and Bank of England.
Gold is on track to chalk up solid gains for a second week running. Although the dollar has bounced back in the last couple of days of this week, it had fallen sharply the week prior, as contrary to the FOMC’s last meeting minutes, the Fed made it clear that a rate hike on Wednesday of next week was highly unlikely. The Fed expressed concerns about the May U.S. jobs report and the potential implications of Britain leaving the EU (Brexit). The probability of a July rate rise has also fallen quite sharply.
Traders said oil prices rose on a sharp fall in the dollar on Friday after weak U.S. jobs data sparked concerns over the state of the world's biggest economy, cutting expectations of a near-term cut in U.S. interest rates.
Fundamental indicators rose in priority as the U.S. Federal Reserve had signalled in the Federal Open Market Committee meeting minutes that its members would consider a rate hike in June if the economy improved. The two indicators released on Friday depreciated the USD across the board. The U.S. non farm payrolls (NFP) recorded a two-year low at 36,000 jobs added in May.