The dollar index gained 0.12% to 101.77, and earlier pushed to a three-week peak of 101.80
The dollar scaled a more than six-week high versus the yen on Thursday as robustness in the U.S. jobs market reinforced bets the Fed will not rush to cut interest rates.
The yen came under strong selling pressure after Japan’s new prime minister said on Wednesday following a meeting with the central bank governor that the country is not ready for further rate hikes.
The euro sat not far from a three-week low hit in the earlier session, after normally hawkish ECB policymaker Isabel Schnabel took a dovish tone on inflation, cementing bets for a rate cut this month.
The safe-haven U.S. currency saw additional demand as tensions simmered in the Middle East.
The dollar index gained 0.12% to 101.77 as of 0349 GMT, and earlier pushed to a three-week peak of 101.80.
The ADP’s private payrolls report on Wednesday showed a larger-than-expected 143,000 increase in U.S. jobs last month, raising expectations for a strong non-farm payrolls reading on Friday that could be critical for dictating the pace of Fed easing.
Currently, traders lay 35.9% odds of another 50 bp U.S. rate cut on November 7, as per the CME Group’s FedWatch Tool, after the Federal Reserve started its easing cycle with a super-sized cut last month. That’s down from 36.8% odds a day earlier, and 57.4% a week ago, but still appears too high, said Ray Attrill, head of FX strategy at National Australia Bank.
Although the ADP report is often a poor predictor of the non-farm payrolls number, Wednesday’s data does reduce the odds of an outsized downside miss on payrolls, Attrill said.
I do think that if the payrolls report overall is not too shabby tomorrow night, then we will see that pricing for a 50 bp cut coming in quite significantly, he added.
The dollar gained 0.26% to 146.80 yen after earlier reaching 147.25 for the first time since August 20.
The euro declined 0.1% to $1.10345, putting it close to Wednesday’s low of $1.10325, a level last seen on September 12.
Sterling softened 0.13% to $1.32485.
The Australian dollar slipped 0.33% to $0.68635.
