He global dollar rose to a six-week high on Thursday after data showed the U.S. economy remains strong ahead of the U.S. employment on Friday, while demand for safe-haven assets on concerns over rising tensions in Middle East and the impact of a dockworkers’ strike also boosted the currency.
He dollar index, which measures the performance of the greenback in relation to a basket of six other internationally relevant currencies, rose 0.33% to 101.98, reaching 102.09, its highest level since August 19 , after the low in 14 months (100.15) that hit on September 27.
He euro fell 0.17% to $1.1026 and was trading at $1.1008, its lowest level since September 12, amid growing expectations that the European Central Bank cut rates at its Oct. 17 meeting as inflation recedes.
The pound sterling fell 1.15% to $1.3114 and reached $1.3093, its lowest level since September 12, after the governor of the Bank of England, Andrew Bailey, said the British central bank could move more aggressively to cut interest rates if inflationary pressures continue to weaken.
The dollar rose 0.27% to 146.85 and earlier hit 147.25, its highest level since August 20, after the board member of the Bank of Japan, Asahi Noguchi, He said the Japanese central bank must act cautiously and slowly to avoid damaging the economy.
“The dollar has been regaining some ground this week… some of that is simply because markets are trying to navigate a lot of cross currents,” he said. Vassili Serebriakov, macro and currency strategist at UBS in New York.
A rapid recovery of the dollar
The dollar has also benefited from more dovish expectations from central banks built into its peer currencies, including the euro, the pound sterling and the yen.
Thursday’s data showed that activity in the services U.S. GDP jumped to a 1-1/2-year high in September amid strong growth in new orders, although its measure of services employment fell, in line with a slowdown in the labor market.
“Today is an example of how quickly the US dollar can recover,” he said. Juan Perezdirector of operations for Monex USA in Washington. While Thursday’s data was “a little contractionary,” USA remains “the envy of other countries,” he said.
Other data on Thursday showed the number of Americans filing new claims for unemployment benefits rose marginally last week, but the ravages of Hurricane Helene in the southeastern United States and attacks on Boeing and ports could distort the market outlook. employment in the short term.
Employment data and expectations about the Fed
Improving economic data and more aggressive comments from the Federal Reserve Chairman Jerome Powell Monday have reduced expectations that the Fed will cut rates by another 50 basis points at its Nov. 6-7 meeting.
The September jobs report due out Friday is the next major release from the U.S. economy that may influence Federal Reserve policy. Economists polled by Reuters expect 140,000 jobs to be created, while the unemployment rate is expected to remain stable at 4.2%.
“US data has been a little firmer, which probably makes the market a little more cautious about selling dollars ahead of the U.S. non-farm payrolls”, Serebriakov said.
Traders now estimate at 35% of prices a probability of a 50 basis point cut next month, down from 49% a week ago, the tool shows FedWatch of the CME Group.
Source: Ambito
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