The dollar remains stable as traders consider labour statistics and forecast

6 Dec 2023 , 09:56 AM

Wednesday saw the dollar hover around a two-week high versus a basket of currencies as investors evaluated U.S. economic data indicating a cooling employment market and bet the Federal Reserve will lower rates in 2019.

The dollar index, which compares the value of the US dollar to six competitors, increased by 0.019% to 103.99 after rising by 0.3% over the previous day. After falling 3% in November—its biggest monthly decrease in a year—the index is up 0.5% this month.

In October, U.S. job vacancies reached a 2-1/2-year low, according to data released on Tuesday. This is the clearest indication yet that the demand for labour was being tempered by higher interest rates. According to data, there were 1.34 job openings for every unemployed person.

In order to shed light on the health of the economy ahead of the Fed’s policy meeting next week, attention will now turn to the November jobs report, which is expected to be released on Friday.

OCBC currency strategist Christopher Wong stated, ‘This week’s highlight is payrolls (report),’ cautioning that a negative surprise could cause the dollar’s recovery to halt.

Prior to the U.S. central bank’s meeting on December 12–13, where a major focus will be the updated predictions of where the bank sees rates in 2024, Fed policymakers are currently in a blackout period.

According to CME’s FedWatch tool, traders have priced in a 99.7% chance of the Fed holding steady next week but a 56% chance of the central bank lowering rates in March.

According to a Reuters poll of foreign exchange analysts, the widely anticipated rate reduction in 2024 will cause the dollar to weaken its hold on other G10 currencies next year, lowering the outlook for the greenback.

The euro, meanwhile, was trading at $1.0795 after plunging to a three-week low of $1.07785 on Tuesday.

By March, investors think the European Central Bank will have lowered interest rates for the first time. The consumer pricing data released last Thursday shows that inflation has decreased more quickly than most had predicted within the euro zone.

At $1.2601, sterling was up 0.06% for the day. The value of the Japanese yen rose 0.03% to 147.12 per US dollar.

The offshore Chinese yuan dropped to $7.1657 per dollar, down 0.09% against the US currency. China’s credit outlook was downgraded to ‘negative’ by rating company Moody’s on Tuesday.

Bitcoin reached its highest point in cryptocurrency history, $44,000, and was last trading at 43,995.

The expectation that exchange-traded spot bitcoin funds (ETFs) may soon be approved by a U.S. regulator has contributed to the largest cryptocurrency’s 150% increase this year.

For feedback and suggestions, write to us at [e-mail]