Dollar set for 5th winning week on hawkish Fed as payrolls loom

Euro, Hong Kong dollar, U.S. dollar, Japanese yen, pound and Chinese 100 yuan banknotes are seen in this illustration, January 21, 2016. REUTERS/Jason Lee

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TOKYO, May 6 (Reuters) – The dollar was heading for a fifth winning week against its major peers on Friday, ahead of the closely watched U.S. jobs report which is expected to bolster the case for aggressive tightening monetary policy.

The greenback was up for a ninth week against the yen, as benchmark US Treasury yields resumed their ascent – ​​topping 3.1% overnight – after a sudden drop immediately after the Federal Reserve raised interest rates by half a percentage point mid-week, putting it ahead of hawkish global central banks.

Economists predict that 391,000 solid jobs in the United States were added last month, according to a Reuters poll.

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The dollar index – which tracks the currency against six rivals – edged up 0.02% to 103.59 on Friday, up 0.35% for the week. It hit 103.94 in the previous session for the first time in two decades.

The greenback gained 0.22% to 130.46 yen, gaining 0.46% on the week and closing in on last week’s 20-year high at 131.25.

The dollar initially fell sharply on Wednesday, as Fed Chairman Jerome Powell said following the rate hike that a 75 basis point hike was not being actively considered. Read more

But he more than recouped those losses on Thursday, suggesting to analysts at National Australia Bank that the retreat had more to do with positioning than any change in outlook.

“Powell was unambiguously hawkish,” Gavin Friend, senior market strategist at NAB, said in a client podcast.

“They will do what they have to do to get inflation under control,” supporting US yields and the dollar, he said.

NAB revised its currency forecast on Friday, predicting the dollar will strengthen to $1.02 per euro and $1.20 against the pound sterling by the end of September, but decline slightly to 125 yen at that time.

The euro slipped 0.11% to $1.0529 on Friday, keeping it down 0.12% for the week, but the currency has mostly traded sideways since hitting a five-year low at 1 $.04695 last week.

The British pound edged down 0.05% to $1.23475, down 1.81% for the week. It fell 2.22% overnight, the most in two years, after the Bank of England warned of recession risk by raising interest rates by half a percentage point . Read more

The cryptocurrency bitcoin lost 0.84% ​​to $36,225, extending the previous session’s 7.94% drop, when it hit a low of $35,579.40, a level not seen since late. february.

The Australian dollar fell 0.27% to $0.7093 but reversed the trend for the week, en route to a 0.52% rally against the greenback – ending a five-week losing streak – after the central bank raised rates more than expected and signaled further moves forward.

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Reporting by Kevin Buckland; Editing by Sam Holmes

Our standards: The Thomson Reuters Trust Principles.

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