Dollar Weakens as Traders Position for NFP; Euro Up
The dollar weakened against all Group-of-10 peers as focus shifted to US payrolls report Friday. The Swiss franc and euro were among best performers in the group.
The Bloomberg Dollar Spot Index fell 0.4%, second day of declines.
“I see some hedging against the dollar in preparation for NFP tomorrow morning — seems like traders are thinking there is a good chance of an undershoot,” said Helen Given, a foreign-exchange trader at Monex, adding that there can be “an upside surprise” as well.
The dollar strength to continue into next year, allowing the greenback can stay close to current levels or a bit higher, according to John Flahive, head of fixed income at BNY Mellon Wealth Management, citing continuation of the interest-rate differential and US economic growth outperformance against the rest of the world.
“We are not looking for a massive dollar appreciation, we are not overly bullish,” he said about next-year performance
He expects the Federal Reserve to lower borrowing costs by 25 basis points at the December meeting.
“We expect the USD rally to continue into Q1 2025, and potentially persist through the first half, bringing the USD into a new and higher range relative to the past two years,” Citi’s Daniel Tobon, Osamu Takashima and Brian Levine wrote in the annual FX outlook. “We suspect the USD will give back much of its gains in H2”.
USD/JPY drops as much as 0.6% to 149.66 before steadying above the 150 handle.
Bank of Japan Board Member Toyoaki Nakamura said he didn’t object to an interest-rate hike, though is watching the data.
Two-week volatility now captures the next Fed and BOJ meetings and rose to one-month high.
EUR/USD advance 0.7% to 1.0585, up a third day.
Emmanuel Macron needs to find a premier who can pass a 2025 budget through a deeply divided parliament; a sale of French debt skewed toward longer maturities received solid demand from investors.
GBP/USD up 0.4% to 1.2750 amid bullish technical signals.
Source : Bloomberg
