Dollar Wavers As Traders Await U.S. Jobs Update

U.S. dollar banknotes are displayed in this illustration taken, February 14, 2022. Reuters / DADO RUVIC

The dollar wobbled toward its first steady week in three on Friday as traders looked to U.S. jobs data for clues as to how far and fast the Federal Reserve might raise interest rates.

Markets have locked in consecutive 50-basis-point Fed hikes in June and July but the dollar has been pushed around this week by uncertainty about what happens after that.

The dollar rose through the early part of the week on nerves that record high inflation in Europe was a harbinger of sharply higher rates everywhere. But it fell on Thursday and stocks rallied as mixed U.S. economic data muddied the outlook.

The dollar was nursing those losses on Friday and sat at $1.0750 per euro, flat for the week, and 129.85 yen, a gain of about 2%.

Asia trade was thinned by holidays in China and Hong Kong, and a holiday in Britain is likely to further lighten things while traders wait for U.S. employment data at 1230 GMT.

Low volume exaggerated a jump in the offshore yuan, which was last up about 0.3% at 6.6329 per dollar.

"Equity markets are pushing higher," said Chris Weston, head of research at brokerage Pepperstone in Melbourne. "I think the equity market is effectively the horse and the dollar in this case is the cart."

The S&P 500 index rose 1.8% on Thursday. [.N]

The risk-sensitive Australian and New Zealand dollars each made multi-week highs and look set for weekly gains. Having broken resistance at $0.72, the Aussie is garnering support ahead of an expected rate rise next week. [AUD/]

The dollar index was flat at 101.76 through the Asia session and is very marginally higher on the week - pausing a decline following two consecutive weekly losses of more than 1%.

The yen has been kept under pressure by super-low interest rates in Japan and little chance of them following the rest of the world higher, responsible for its weekly loss.

Thursday data showed a softer-than-expected rise in private hiring in the United States along with a surprise drop in the number of filings for unemployment benefits.

U.S. non-farm payrolls data is due later on Friday and although markets and central banks are currently focused on inflation, the labour market will guide wage expectations and sentiment about the strength of the broader economy.

"For equities right now, anything that might be viewed as capping the Fed's tightening could be viewed as supportive," said ING economist Rob Carnell, adding that Treasuries and currency markets would then likely take their cues from stocks.

Sterling held gains at $1.2569. In cryptocurrencies bitcoin hovered around $30,000.

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Currency bid prices at 0519 GMT

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

Previous Change

Session

Euro/Dollar

$1.0749 $1.0746 +0.02% +0.00% +1.0765 +1.0745

Dollar/Yen

129.8500 129.8700 -0.09% +0.00% +130.0300 +129.7550

Euro/Yen

139.58 139.59 -0.01% +0.00% +139.7700 +139.4800