The dollar index, which measures the US currency against six peers, was up 0.019 per cent at 103.99, having jumped 0.3 per cent overnight

The dollar was near a two-week high against a basket of currencies on Wednesday as investors evaluated US economic data that showed a cooling labour market, while wagering the Fed will cut rates next year.

The dollar index, which measures the US currency against six peers, was up 0.019 per cent at 103.99, having jumped 0.3 per cent overnight. The index is 0.5 per cent higher this month, after slipping 3 per cent in November, its sharpest monthly drop in a year.

Data on Tuesday showed US job openings dropped to more than a 2-1/2-year low in October, the strongest sign yet that higher interest rates were dampening demand for workers. Data also showed there were 1.34 vacancies for every unemployed person in October, the lowest since August 2021.

The focus will now shift to the Friday release of the November jobs report to provide clues on the strength of the economy ahead of the Federal Reserve’s policy meeting next week.

This week the highlight is payrolls (report), OCBC currency strategist Christopher Wong said, adding that a downside surprise could see dollar recovery stall.

Fed officials are now in a blackout period ahead of the US central bank’s December 12-13 meeting, where a key focus will be the updated projections of where they see rates at in 2024.

Traders have priced in 99.7 per cent possibility of the Fed standing pat next week but a 56 per cent possibility of the Fed cutting rates in March, as per the CME’s FedWatch tool.

The widely expected rate cuts in 2024 will result in the dollar loosening its grip on other G10 currencies next year, dimming the outlook for the currency, as per Reuters poll of foreign exchange strategists.

In the meantime, the euro was at $1.0795, having declined to three-week low of $1.07785 on Tuesday.

Investors believe the ECB could deliver its first rate cut by March. Inflation across the euro zone has dropped more rapidly than most expected, as evidenced by last Thursday’s consumer price data.

Sterling was last at $1.2601, 0.06 per cent higher on the day. The Japanese yen firmed 0.03 per cent to 147.12 per dollar.

The offshore Chinese yuan eased 0.09 per cent versus the greenback to $7.1657 per dollar. Ratings agency Moody’s cut China’s credit outlook to “negative” on Tuesday.