Dollar creeps higher ahead of U.S. jobs report

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LONDON (Businesshala) – The dollar edged higher against key peers on Friday, but traders within a narrow range await clues from a US non-farm payrolls report on the pace of Federal Reserve policy normalization.

FILE PHOTO: The euro, Hong Kong dollar, US dollar, Japanese yen, pound and Chinese 100 yuan banknotes are seen in this illustration on January 21, 2016. Businesshala/Jason Lee/Illustration/File photo

The US dollar currency index, which measures the greenback against a basket of six peers, rose 0.1% to 94.294, noting last week’s one-year peak of 94.504.

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The dollar rose 0.3% to 111.96 yen, and touched 111.975, its highest level this month, helped by higher Treasury yields, with the benchmark 10-year note up 1.6010% for the first time since June 4.

The euro weakened on Wednesday and consolidated near $1.1550, a 14-month low of $1.1529.

The Federal Reserve has said it could begin reducing its monthly bond purchases as soon as November and follow up with a possible interest rate hike next year, as the US central bank’s pandemic crisis policies stymie. speed is achieved.

Non-farm payroll data, later on Friday, is expected to show continued improvement in the labor market, with the consensus forecast for 500,000 jobs in September, although estimates ranged from 250,000 to 700,000, a Businesshala poll showed.

G10 FX strategist Francesco Pesol said, “Our expectations are for a 470k increase in employment (consensus is around 500k), enough to support market expectations around the November announcement and the rate hike at the end of 2022. Should be.” ing.

“Ultimately, a solid number should give little reason to turn any short bearish on the long end of the curve. In the FX markets, this may well translate into general support for the dollar and another bad day for the yen. which is the worst performing G10 currency so far (this year),” Pesol said.

After the September Federal Open Market Committee meeting, Fed Chair Jerome Powell said the upcoming payrolls report does not require a “knock-out, great, super-strong” report to keep policymakers on track toward tapering off, but It’s called “reasonably good”.

Adam Cole, chief currency strategist at RBC Capital Markets, wrote in a research note, Powell’s remarks “should make the market more tolerant of negative surprises in particular, and the balance of risks supports a positive USD response”.

Meanwhile, the Australian dollar fell 0.26% to $0.7293 after gaining 0.55% on Thursday. It touched $0.7324 for the first second day, which is the strongest level since September 16.

Rodrigo Catril, senior FX strategist at National Australia Bank in Sydney, wrote in a client note that the Aussie has made “a good move on breaking higher”, but the test will be whether it can stay at around $0.7315 this year after several failed attempts. Yes or No. .

Sterling slipped 0.16% to $1.3595, up 0.26% from Thursday, when new Bank of England chief economist Hugh Pill said inflationary pressure was higher than initially thought, reinforcing expectations of a rate hike by February. While doing so, was proving sticky.

The Canadian dollar was little changed at C$1.2548 per greenback after previously consolidating at a one-month high of C$1.2534 on rising oil prices.

Reporting by Rithvik Carvalho; Additional reporting by Kevin Buckland in Tokyo; Editing by Susan Fenton

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