Dollar soars high for US jobs test

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  • The dollar hits 15-month high at 110.65 yen
  • All eyes on U.S. payroll data

SINGAPORE, July 2 (Reuters) – The US dollar was perched 15-month high against the yen and multi-month highs against other majors on Friday as traders bet strong US labor data which could increase it even more.

The jobs report is due at 12:30 p.m. GMT and is expected to post a solid increase of 700,000. But there is talk of the number rising and the risk that upsets the assumption that US interest rates can stay on. at the lowest levels for years.

The dollar climbed 0.7% against the yen this week and hit its highest level since March 2020 on Friday, as investors revalued dollar short positions after months of strong data and a hawkish change in tone from the Federal Reserve.

The dollar rose 0.06% to 111.65 yen in early Asia, and at $ 1.1843 per euro, it was also a hair’s breadth off Thursday’s three-month high of $ 1.1837 for one euro.

It hit a new two-and-a-half-month high of $ 1.3752 against the British pound and held near its highest level since December against the Australian dollar at $ 0.7467, putting it well ahead of the pound. above the all-time low reached in May.

“A lot of people are now wondering (about) if the dollar has actually bottomed, because at some point in 2023 the Fed is suggesting it might raise interest rates,” said Paul Mackel, global head of forex research at HSBC in an outlook call. .

“There is also some nervousness about whether the dollar will start to behave more procyclically i.e. if the data is stronger than expected in the United States that the dollar is really pulling more out of it. by force. “

The US dollar index was flat at 92.549 in Asia, having gained 0.8% in the week so far and moves elsewhere have been slight as markets wait for US data.

The dollar index is now up 3.4% from May lows as shorts cut positions, and some say move makes it vulnerable if jobs numbers fall short of high expectations .

“There has been a tendency in 2021 for the dollar to show an asymmetric reaction to the wage bill, so that a failure has generated more dollar decline compared to the rise generated by a stronger than expected exit,” he said. said Francesco Pesole at ING, which projects payroll to add between 500,000 and 600,000 jobs.

“If our economist’s projections for a positive NFP but below consensus prove to be correct, we would expect FX price action to turn out to be broadly negative for the dollar, as some of the Fed’s hawkish expectations are reduced, ”Pesole said, referring to the United States. data on non-agricultural wages.

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Price of currency offers at 0124 GMT

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Reporting by Tom Westbrook; Editing by Himani Sarkar

Our Standards: Thomson Reuters Trust Principles.


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