Dollar near two-week high
TOKYO FXPREMIERE Telegram Signals (Reuters) – The dollar hovered near a two-week high on Thursday, consolidating ahead of a key U.S. jobs report that may provide clues on when the Federal Reserve will dial back monetary stimulus.
The greenback has rebounded from a one-month low over the past week, swung by U.S. economic data that has largely supported the case for a rapid recovery from the pandemic, with traders weighing whether a lift in inflation may force the Fed’s hand earlier than policymakers have so far suggested.
With several forecasters predicting a one-million-plus increase in nonfarm payrolls, “the USD may continue to find a good level of support in the near-term,” with the currency strengthening to $1.19 per euro over a one-month horizon, she said.
The euro traded right around the psychologically important $1.20 mark on Thursday, a day after dipping to $1.1986 for the first time since April 19.
The dollar bought 109.375 yen, consolidating after rallying as high as 109.695 on Monday, a level not seen since April 13.
So far, Fed Chair Jerome Powell has argued the labour market is far short of where it needs to be to start talking of tapering asset purchases. The central bank has said it will not raise its benchmark Fed funds rate through 2023.
Three Fed officials spoke on Wednesday, with Chicago Fed President Charles Evans saying that while he was more optimistic about U.S. growth than he was a few months ago, he expects monetary policy to stay super-easy for some time.
Boston Fed President Eric Rosengren said inflation will be temporarily distorted this spring as the U.S. economy works through imbalances caused by the pandemic but the pressures should be short-lived and should not lead to a pullback in monetary policy.
Cleveland Fed President Loretta Mester said more progress will be needed in the job market before the Fed’s conditions for reducing its extensive support will be met.
“Despite constant reassurances from (U.S. Treasury Secretary Janet) Yellen and an array of Fed officials that the coming increase in inflation will prove ‘transitory,’ … markets are evidently a bit more worried,” National Australia Bank (OTC:NABZY) strategist Rodrigo Catril wrote in a client note.
The dollar bounced on Tuesday after Yellen said rate hikes may be needed to stop the economy from overheating, though she later downplayed the immediacy of tightening.
In cryptocurrencies, ether traded at $3,462.62 after reaching a record $3,559.97 on Tuesday, skyrocketing nearly 800% this month.
Bigger rival bitcoin was around $56,755, vacillating between around $59,000 and $52,000 in recent days. It marked a record high at $64,895.22 in mid-April, but then lost momentum, slumping as low as $47,004.20 toward the end of that month.
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Dollar near two-week high