On Friday, ahead of the U.S. data jobs report, the dollar climbed towards a 10 week high. The dollar Index which measures the greenback against six major currencies gained 0.1 percent to 95.804 outperforming other major currencies. While the euro zone came in below analysts expectations.
Thursday’s private payrolls data came in better than forecast pushing the 10 year U.S. Treasury note benchmark to a high, last seen since May 2011.
Focus on U.S. Jobs Report
Investors are now focusing on the U.S. Jobs report due on Friday which they hope will shed some light on whether the Fed will continue its aggressive rate-hiking cycle. The report will give some indication of the labour market strength and new wage growth.
Also closely watched will be any indication of an increase in U.S. inflation following Amazon’s announcement that they were raising minimum wages for their workforce.
Currency strategist at Commerzbank in Frankfurt, Antje Praefcke said that the relevance of the U.S. labour market report for the dollar has been downplayed. The data will play a significant role over the debate by the Fed on the rate hike cycle.
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The Federal Reserve Bank are looking to increase rates in December in addition to another three next year and another increase in 2020.
According to reports, Jerome Powell Fed Chairman said that the U.S. is on the threshold of ultra-low unemployment which is historically rare. Spooking investors he also said that the Central Bank could foreseeably boost its benchmark past neutral levels.
A Treasury sell off was sparked by the data of the strength of the American economy sending U.S. Treasury yields and the euro/dollar currency pair to breach technical levels.
The Australian dollar fell 0.3 percent to $0.7054, a fourth straight session of losses, for the month it has fallen 2.1 percent.
The euro fell 0.1 percent to $1.1497, for this month it has fallen almost 0.8 percent against the dollar.
Senior currency strategist, Yukio Ishizuki at Daiwa Securities foresees the continued strengthening of the dollar against the euro and the yen.
Reports that the negotiators for the EU Brexit deal said that the deal was very close saw the Sterling gain to a 3 month high of 88.14 pence against the euro on Friday.