Dollar Strengthens Ahead of NFP as Traders Unwind Shorts
The dollar strengthened against all Group of 10 currencies except the Swiss franc amid profit-taking ahead of the U.S. payrolls report.
After its biggest drop since 2022 on Thursday, the Bloomberg Dollar Spot Index erased losses in Asia to rise as much as 0.4%, before paring gains; it is down 1.3% this week.
The U.S. labor market is expected to have held up in March with the unemployment rate seen holding steady at a historically low 4.1%, before the negative impact of tariffs. Nonfarm payrolls growth probably slowed to 140,000 in March after a 151,000 gain in the previous month, according to the median estimate in a Bloomberg survey of economists. One-month risk reversals on BBDXY at 6bps, put versus call, were down 8bps on the day.
Risk-sensitive currencies led losses while the U.S. 10-year yield fell 7bps to 3.96%, for the longest losing streak since February. AUD/USD fell 2% to 0.6201, lowest in a month as NZD/USD fell 2.0% to 0.5681; falling stocks and lack of demand from exporters spurred liquidation of long leverage from the Aussie and kiwi against the dollar, according to an Asia-based forex trader
EUR/USD fell 0.7% to 1.0976, versus an intraday high of 1.1108; one-week risk at 63bps, versus a high of 142bps on Thursday. EUR/GBP +0.4% to 0.8472, highest since Jan. 20
USD/JPY rose as much as 0.3% to 146.49; USD/CHF fell 0.4% to 0.8556, adding to a 2.9% weekly decline, the widest since July 2023
Source: Bloomberg
