Dollar near multi-month highs ahead of U.S. jobs report

by Jonathan Adams
dollar

The index posted its best month since November 2016 in June on the Fed’s surprise hawkish shift last month

The dollar reached a new 15-month high versus the yen and hovered near multi-month highs against other major peers on Thursday, ahead of a key U.S. jobs report that should offer clues on when the U.S. Fed will start to taper its stimulus package.

The greenback advanced 111.165 yen for the first time since March 26, 2020, before retreating slightly to 111.055.

The dollar index held just below a 2 1/2-month top of 92.451 reached Wednesday, inching up on the day to 92.402.

The index posted its best month since November 2016 in June on the Fed’s surprise hawkish shift in the middle of that month, when policymakers signalled two interest rate hikes by the end of 2023.

Traders are now eyeing Friday’s U.S. nonfarm payrolls report for confirmation of that outlook, with economists polled by Reuters expecting a gain of 700,000 jobs last month, compared with 559,000 in May, and an unemployment rate of 5.7% compared to 5.8% during the previous month.

The greenback extended gains Wednesday after data showed U.S. private payrolls rose a more-than-expected 692,000 jobs in June.

I see the balance of risk skewed to an above-consensus print for nonfarm payrolls, Chris Weston, head of research at broker Pepperstone in Melbourne, wrote in a note to clients. A payrolls north of 800k could get U.S. bond yields higher and put a further bid in the USD.

If the euro breaks convincingly below current levels versus the dollar, this could be a magnet to attract USD flow, he said, adding JPY seems universally weak.

The euro inched down to $1.1851 after hitting $1.1845 on Wednesday for the first time since April 6.

The Aussie dollar lost 0.2% to $0.7485, approaching last week’s six-month low at $0.7478.

Sterling dropped 0.1% to $1.3811, inching toward a recent two-month low of $1.37865.



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