Dollar rides high on rate hike bets ahead of payrolls report

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By Tom Westbrook


SYDNEY (Reuters) – The is set to notch broad weekly gains and could extend its rally if U.S. labour data due on Friday reinforces the case for early Federal Reserve interest rate hikes.





The yen has been the most prominent casualty in the first trading week of the year, as investors reckon the Bank of Japan is likely to lag most of all on rate hikes.


But firming expectations that the Fed could raise rates as soon as March and several times this year is pushing up U.S. yields and the currency.


The greenback hit a five-year peak on the yen at 116.35 on Tuesday and hovered around 115.87 in Asia on Friday, where moves were slight ahead of jobs data at 1430 GMT.


It is up about 0.7% on the yen this week and about 2.7% over five weeks. The is also eyeing its best week in more than a month against the Australian and New Zealand dollars.


The Aussie fell through support around $0.7184 on Thursday and last bought $0.7159. It has lost 1.5% for the week so far. The kiwi was near a two-week low at $0.6751 on Friday and down 1.4% for the first trading week of 2022. [AUD/]


The greenback is also up about 0.6% for the week to $1.1301 per euro. It surged to a 17-month high on the South Korean won, though has eased a bit from Thursday’s six-week peak against the offshore yuan.


On Thursday, St. Louis Fed President James Bullard said the Fed could also start reducing its balance sheet soon after it begins hiking, and even dovish San Francisco Fed President Mary Daly said the balance sheet reduction would follow normalising rates.


Partial labour data on Wednesday beat market expectations by miles and a strong non-farm payrolls figure later on Friday, especially if it is bigger than the forecast 400,000 jobs added last month, could bolster the case for sooner hikes.


“If it is a very strong number the Fed has more fuel to maintain the hawkish rhetoric, which further supports the March hike probability,” analysts at NatWest said in a note to clients, adding the downside is probably limited.


The U.S. index hovered at 96.206.


Elsewhere, sterling has held its own this week as traders figure the Bank of England will soon begin its own hiking path. It last bought $1.3545, not far from Tuesday’s two-month high of $1.3599. It is near a two-year high on the euro.


The big moves in the U.S. bond market have unsettled traders’ sentiment across asset classes, too, and cryptocurrencies have dropped sharply in holiday-thinned trade.


Bitcoin hit its lowest since September in Asia trade at $40,939. A break of support around $39,000 could leave it open to further losses, traders said. Ether was last down 5% at a three-month low of $3,245.


Rising Omicron cases are also causing jitters and in emerging markets the Thai baht nursed a Thursday slide after the country raised its virus alert level, foreshadowing tighter restrictions. [EMRG/FRX]


========================================================


Currency bid prices at 0527 GMT


Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid


Previous Change


Session


Euro/Dollar


$1.1302 $1.1300 +0.02% -0.58% +1.1303 +1.1290


 


Dollar/Yen


115.8900 115.8500 +0.03% +0.76% +116.0400 +115.8900


 


Euro/Yen


130.98 130.88 +0.08% +0.51% +131.0500 +130.8600


 


Dollar/Swiss


0.9211 0.9213 -0.03% +0.98% +0.9217 +0.9211


 


Sterling/Dollar


1.3545 1.3536 +0.06% +0.15% +1.3552 +1.3528


 


Dollar/Canadian


1.2713 1.2727 -0.11% +0.55% +1.2730 +1.2707


 


Aussie/Dollar


0.7159 0.7163 -0.02% -1.48% +0.7177 +0.7158


 


NZ


Dollar/Dollar 0.6751 0.6747 +0.09% -1.34% +0.6755 +0.6740


 


 


All spots


Tokyo spots


Europe spots


Volatilities


Tokyo Forex market info from BOJ


 


(Reporting by Tom Westbrook; Editing by Edwina Gibbs and Jacqueline Wong)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)





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