The dollar index was at 101.88, not far from a six-week high of 102.09 hit on Thursday
The dollar hovered near a six-week high on Friday ahead of a payrolls report that could decide the path of U.S. interest rates, while the yen soared to cap a turbulent week hit by uncertainty over Japan’s monetary policy outlook.
The dollar was also boosted by safe-haven demand as investors weighed widening Middle East tensions and their impact on the global economy.
The dollar index was at 101.88, not far from a six-week high of 102.09 hit on Thursday. The index is up almost 1.5%, for the week, its strongest such performance since April.
Regaining some ground lost over the week, the yen gained 0.5% to 146.18 per dollar, though it stayed near an over six-week low of 147.25 reached a day earlier.
The spotlight on Friday though will be on the U.S. non-farm payrolls report after data on Thursday showed the U.S. labour market gliding at the end of the third quarter.
There is little evidence to suggest a U.S. hard landing is on the horizon, according to Prashant Newnaha, a senior Asia-Pacific rates strategist at TD Securities.
Our sense is that the risks to September non-farm payrolls lie to the upside and should see U.S. Treasuries continue their push higher in yield, he said.
Markets are pricing in a 33% probability of the Fed cutting interest rates in November by 50 bps, down from 49% last week, according to the CME FedWatch tool. The Fed cut interest rates last month by 50 basis points.
A stronger-than-expected September payrolls number could be viewed as dovish, said Kieran Williams, head of Asia FX at InTouch Capital Markets, as it would bring the unemployment rate in line with the Fed’s end-2024 forecast.
This may prompt some officials to consider a 50 basis point rate cut in November, he said.
