FX Rate News

The dollar sank to its lowest in almost a month against major rivals on Friday, ahead of a crucial U.S. jobs report that could spur the Federal Reserve to an earlier tapering of stimulus.

The dollar index , which measures the greenback against six peers, slipped 0.04% to 92.193 after earlier touching 92.189 for the first time since Aug. 5.

The euro edged up 0.02% to $1.1878, after hitting the highest since Aug. 4 at $1.1880.

The U.S. central bank has made a labor market recovery a condition for paring pandemic-era asset purchases.

The dollar had been strengthening for most of last month on the view that a taper could be imminent, even as Covid-19 cases spiked in the United States, which paradoxically gave the currency an additional boost because of its role as a safe haven.

But the dollar index retreated after hitting a 9 1/2-month high of 93.734 on Aug. 20 as Fed officials began suggesting the virus’ spread could delay policy tightening.

Chair Jerome Powell said at the Fed’s Jackson Hole symposium a week ago that a taper was still possible this year, but there was no hurry to subsequently raise interest rates, sending the dollar down further.

Monthly non-farm payrolls, due later Friday, are expected to rise by 750,000, with the unemployment rate falling to 5.2% from 5.4%, according to a Reuters poll of economists. However, estimates range widely, from as little as 375,000 to over a million.

Signals from the economy ahead of the report have been mixed. Overnight, data showed layoffs dropped to their lowest in more than 24 years. However, the ADP National Employment Report on Wednesday was much weaker than economists expected.

Commonwealth Bank of Australia forecasts the United States added 800,000 jobs last month, which it says would be enough to spur the Fed to taper, although the bar for an announcement at this month’s meeting has been raised by the current outbreak.

“The risk is uncertainty associated with the virus stands in the way of an imminent taper announcement,” which would reverse any dollar gains from a strong payrolls report, CBA strategists wrote in a client note.

The Australian dollar was little changed at $0.74005 from Thursday, when it reached the highest since Aug. 5 at $0.74095.

The New Zealand dollar was about flat at $0.71145 after rising to the highest since June 16 at $0.7120 in the previous session.

The greenback was little changed at 109.915 yen , holding near the center of its trading range since early July.

The dollar was trading near three-week lows against a basket of currencies on Tuesday, as investors looked to U.S. jobs figures later this week for clues on stimulus taper timing.

The greenback has been on the back foot since Federal Reserve Chair Jerome Powell’s comments at the Jackson Hole conference on Friday that the U.S. central bank could scale back its bond-buying program this year but did not give a firm timeline.

U.S. payrolls numbers due Friday this week will be closely watched, analysts said.

“Powell made clear on Friday that the Fed believes the ‘substantial further progress’ criteria has been met for inflation but not for employment and hence the jobs data will continue to be key for policy expectations,” analysts at MUFG said in a note.

Trade on Tuesday will also likely be driven by month-end flows from businesses for their import and export transactions, traders said.

The dollar index slipped a quarter of a percent to 92.456, its lowest level since August 6.

The euro gained 0.3% against the broadly weaker dollar, hitting a three-week high of $1.18315.

Sterling strengthened to a two-week high of $1.38010, before slipping back below $1.38.

The yen was little changed at 109.85 yen to the dollar.

The New Zealand dollar strengthened 0.9% to $0.70560, a day after the country’s prime minister Jacinda Ardern partially eased lockdown restrictions outside of Auckland.

The offshore Chinese yuan slipped versus the dollar, but was largely steady after soft factory and service sector surveys.

“The drop in the non-manufacturing PMI reflects the impact of the coronavirus. But the infections in China has already peaked and dwindled,” said Ei Kaku, senior strategist at Nomura Securities.

In cryptocurrencies, bitcoin gained 1.6% to $47,752, regaining some of the previous day’s losses.

The dollar held firm on Friday after the U.S. Federal Reserve’s hawkish wing called for tapering bond purchases as investors looked to a highly-anticipated speech by Fed Chair Jerome Powell later in the day.

The dollar index stood at 93.032, bouncing back from Thursday’s low of 92.807 as the euro traded at $1.1755, having eased from the previous day’s high of $1.1779.

The common currency was not helped by a survey showing German consumer sentiment darkened heading into September due to accelerating inflation and rising Covid-19 cases.

Sterling also dropped to $1.3703. Against the yen, the dollar stood little changed at 110.06 yen.

Dallas Federal Reserve President Robert Kaplan suggested he expects the Fed to start raising interest rates next year, a comment that analyst took as more hawkish than last week when he appeared nervous about the potential impact of the delta variant.

Two other regional Fed chiefs — Kansas City Fed President Esther George and St. Louis Federal Reserve President James Bullard — also downplayed the impact of the delta variant in separate interviews, with Bullard repeating his call for the Fed to start trimming its $120 billion in monthly bond purchases soon.

Many investors, however, think Powell will strike a more dovish tone in his speech at 1400 GMT in the Kansas City Fed’s central banking conference.

The event, which normally takes place in Jackson Hole, Wyoming, but is being held virtually for the second straight year due to the pandemic, has been often used by Fed policymakers in the past to provide guidance on their future policy.

“While Chair Powell is likely to … lay the groundwork for an eventual taper, we expect him to err on the side of caution and patience this week given that the macroeconomic landscape has deteriorated since the July policy gathering,” said Candice Bangsund, portfolio manager at Fiera Capital in Montreal, Canada.

Rough consensus in the market is that Powell will likely announce tapering in the fourth quarter, giving a clear signal at one meeting before the actual announcement.

“For Powell, there is no merit in specifying the exact timing for tapering at today’s speech. If he doesn’t drop a clear hint, that will be mildly positive for stocks,” said Kyosuke Suzuki, president of financial algotech company at Ryobi Systems.

Risk-sensitive currencies are likely to gain while the yen is likely to weaken in that case, he added.

For now, the dollar was supported also by caution after a suicide bomb attack in Kabul airport killed scores of civilians and 13 U.S. troops. Islamic State claimed responsibility.

Elsewhere, the Australian dollar fetched $0.7243 ahead of the country’s retail sales data.

In cryptocurrencies, bitcoin slipped to $47,43 while ether also eased to $3,142

The safe-haven dollar traded near a one-week low versus major peers on Wednesday as concerns eased that the highly contagious delta coronavirus variant could derail a global economic recovery, lifting commodity-linked currencies like the Aussie.

Risk appetite in global markets has strengthened since the U.S. Food and Drug Administration granted full approval to the Covid-19 vaccine developed by Pfizer and BioNTech in a move that could accelerate U.S. inoculations.

The United States could get Covid-19 under control by early next year, Dr. Anthony Fauci, the country’s top infectious disease expert, said on Tuesday.

The dollar index, which tracks the currency against six rivals, was little changed at 92.955, after dipping to 92.804 the previous day for the first time since Aug. 17.

Australia’s dollar, which isn’t part of the index, was roughly flat at $0.7254 after climbing as high as $0.7271 on Tuesday, also a one-week high.

The greenback has rallied in recent weeks, with the dollar index hitting a 9 1/2-month high of 93.734 on Friday, not just on fear about delta’s economic impact, but also an the Federal

Reserve signaled a tapering of stimulus was likely this year.

However, with delta clouding the outlook, expectations are diminished that Fed Chair Jerome Powell will indicate a timeline when he speaks at the Fed’s annual economic symposium at Jackson Hole, Wyoming, on Friday.

Against the euro, the dollar slipped 0.08% to $1.17475 on Wednesday, after touching a one-week low of $1.17655 overnight.

It edged up 0.13% to 109.82 yen, another safe-haven currency, but remained around the middle of the trading range since early July.

“The tide of optimism seems to have set in,” lifting commodity currencies at the dollar’s expense, Tapas Strickland, an analyst at National Australia Bank wrote in a client note.

Jackson Hole “looms as the next key test,” but “given the uncertainty it is likely the Fed needs to see another one or two stellar payroll prints, though a taper announcement in 2021 is still likely,” he said.

The dollar was steady on Tuesday, holding near the previous session’s five-day low, as markets appeared less concerned by the spread of the delta variant, while the New Zealand dollar picked up after hawkish comments from the central bank.

Risk appetite in global markets was up, after the U.S. Food and Drug Administration granted full approval to the Covid-19 vaccine developed by Pfizer and BioNTech, a move that could accelerate inoculations in the United States.

Rising Covid-19 infections caused by the highly contagious Delta variant have fueled concerns about the recovery from the global health crisis. But markets have largely looked past this so far this week, with analysts citing thin liquidity as a factor driving apparent swings in risk appetite.

At 7:12 a.m. ET, the dollar was flat on the day at 92.97 versus a basket of currencies. It hit a five-day low of 92.947 on Monday and had its largest one-day drop since May.

Versus the yen, the dollar was unchanged with the pair changing hands 109.67 yen per dollar.

The euro was flat against the dollar, at $1.1742.

Market attention is focused on the Jackson Hole conference on Friday, at which some investors expect the U.S. Federal Reserve Chair Jerome Powell to give hints about the possible timeline for tapering monetary stimulus.

“The uncertainty over the spread of the Delta variant and how local authorities will respond has certainly created a sense of ‘short-termism’ in FX markets,” wrote ING strategists in a note to clients.

“We think investors will want to wait to hear on this subject from Jerome Powell on Friday before pushing ahead with another major round of risk-buying, dollar-selling.”

Covid-19 case counts are also being closely watched, especially in China where outbreaks appear to be coming under control and in New Zealand where monetary policy was put on hold last week while the country locks down to contain the Delta variant.

French health authorities said the number of people hospitalized for COVID-19 and those treated in intensive care units stood at the highest levels in more than two months.

Data on Monday showed business activity growth in the United States slowed for a third straight month.

But the Australian dollar – seen as a liquid proxy for risk appetite – was up 0.5% at $0.7247.

The New Zealand dollar was up 0.8% at a 6-day high of $0.6947, boosted by the Reserve Bank of New Zealand’s assistant governor, Christian Hawkesby, saying that policymakers had actively considered a 50 basis point rate hike at the meeting last week.

The RBNZ left rates on hold at a record-low 0.25% last week, but flagged tightening before the year’s end.

A senior central bank official said on Monday the new outbreak of the coronavirus in New Zealand is not a “game changer” yet and there is no pressure to act on monetary policy.

Firmer commodity prices had also helped the Australian and New Zealand dollars earlier in the session.

The Canadian dollar was down 0.3% against the U.S. dollar.

Elsewhere, bitcoin – which rose above $50,000 for the first time since May on Monday – edged back below this key level. At 7:14 a.m. ET, it was down 0.2% on the day at $49,152.28.

The safe-haven U.S. dollar hovered near a 9-1/2-month high against major peers on Friday, buoyed by fears that the Delta coronavirus variant could delay the global economic recovery.

The greenback has also been boosted by expectations the Federal Reserve could still start to taper stimulus this year, even with COVID-19 infections surging this month in the United States.

The dollar index, which measures the currency against six rivals, was little changed at 93.544 from Thursday, when it touched 93.587 for the first time since early November. For the week, it’s on track to gain 1.1%, the most in two months.

The Canadian dollar dropped to a fresh six-month low of C$1.2832 amid a plunge in oil prices on those economic growth worries, while the Aussie and New Zealand dollars languished near nine-month lows.

“Risk aversion in the air has buoyed the greenback, with pro-growth currencies bearing the brunt of it,” Rodrigo Catril, a strategist at National Australia Bank, wrote in a client note.

The yen, another safe-haven currency, slipped 0.1% to 109.87 per dollar on Friday, but remains in the center of its trading range of the past six weeks.

The euro ticked up 0.05% to $1.6825, but still traded near the 9 1/2-month low of $1.16655 reached overnight. It is down 0.94% this week, the most since mid-June.

Minutes of the Fed’s July meeting, released on Wednesday, showed officials largely expect to reduce their monthly bond buying later this year, although divisions remain on the timing and pace of a taper, and whether inflation, joblessness or the coronavirus pandemic pose a bigger risk to economic recovery.

A decline in debt purchases by the Fed is widely considered positive for the dollar as it is expected to raise U.S. government bond yields, making it more attractive for investors to hold dollar-denominated assets.

The Aussie rose 0.1% to $0.7155 on Friday, but was still close to the 9 1/2-month low of $0.7143 reached on Thursday. It has fallen 3% this week, on track for its worst performance since September of last year, with most of the country under lockdown to battle a COVID-19 outbreak.

New Zealand’s kiwi ticked up 0.1% to $0.6832, but remained near Thursday’s nine-month trough of $0.6810. It has sunk 2.9% for the week, also the worst since September, after its central bank delayed a rate hike, shifting gears as the country went into a snap COVID-19 lockdown.

Sterling touched a fresh one-month low of $1.3628 on Friday, before trading 0.07% higher at $1.3638. It has fallen 1.64% this week, which would be the biggest drop for two months.

The dollar hit a nine-month high against the euro and held broad gains elsewhere on Wednesday as investors have cut exposure to riskier currencies, mostly on virus concerns, while the kiwi was sent on a loop when central bank held fire on rate hikes.

The euro touched $1.1702 early in the Asia session, its lowest since November 2020, before recovering slightly to $1.1718.

The kiwi, heavily sold on Tuesday, fell further to also make a nine-month trough at $0.6868 after the Reserve Bank of New Zealand held off on raising rates amid a snap lockdown in the country over seven Covid-19 cases. However it soon recovered, climbing to $0.6933 because hikes were still on the horizon.

Sterling and the commodity-exposed Australian and Canadian dollars all hovered near recent lows against the dollar as the market mood remained cautious. The dollar index held at 93.068, just below the one-week high it hit on Tuesday.

“The dollar is being supported by the nervous risk environment,” said Moh Siong Sim, currency analyst at Bank of Singapore.

“Markets are paying attention to the delta variant and the area which is of most concern seems to be China,” he said.

“There’s a stock market that’s taken a bit of a beating recently, there’s regulatory risk and now there are Covid outbreaks in China — does this all add up to say that we should be paying a lot more attention to downside risks in China?”

China’s markets have been roiled by a wide front of reform and regulation and on Tuesday China moved to further tighten control of its tech sector, publishing detailed rules aimed at tackling unfair competition and data security.

At the same time, the highly-contagious delta variant has found a foothold in formerly Covid-free New Zealand.

New Zealand’s central bank left interest rates unchanged at a record low of 0.25% owing to uncertainty around the outbreak, which the health chief thinks could run to 50 or 100 cases.

Markets are now pricing a 60% chance of a hike in October.

“The Reserve Bank was ready to pull the trigger, Covid comes along 24 hours earlier and so they’ve just pulled back on that,” said Jason Wong, senior market strategist at BNZ in Wellington.

“It depends on Covid now…if this lockdown’s short, then rate hikes are on the table, but there’s always going to be a half chance it continues longer and the market’s not willing to price a hike.”

Elsewhere, the risk-averse mood that had knocked sterling to a three-week low on the dollar on Tuesday persisted and held the British currency near that level at $1.3754.

The Japanese yen eased on the dollar overnight, but rose against other currencies and touched a 5-1/2-month high of 128.21 per euro in the Asia session. It last traded at 109.55 per dollar.

The commodity-exposed Canadian dollar recovered slightly from an overnight one-month low.

The trade-exposed South Korean won bounced from an 11-month low it touched on Tuesday after a government official said he was closely watching out for a possible overshoot in exchange-rate movements as foreigners sell stocks.

Later on Wednesday traders are looking to minutes from the Federal Reserve’s July meeting for clues around the timing or speed of plans to taper asset purchases. They are due at 1800 GMT.

The dollar rose on Monday against commodity currencies such as the Australian, New Zealand and Canadian dollars, while the safe-haven yen gained as disappointing economic data from China, political tension in Afghanistan, and the spreading Delta variant of the coronavirus weighed on risk appetite.

The dollar’s gains came after a slump in consumer sentiment on Friday weakened the U.S. unit.

Against a basket of six major currencies, the dollar was up 0.1% at 92.620, after falling to a one-week low of 92.468 on Friday. Its gains were most pronounced against commodity currencies.

The Aussie dollar was down 0.6% against the U.S. dollar at US$0.7335, while the New Zealand dollar fell 0.4% to US$0.7016 ahead of a Reserve Bank of New Zealand policy meeting on Wednesday, at which economists widely expect the first hike in the benchmark interest rate since 2014.

The greenback, meanwhile, rose 0.4% against the Canadian dollar to C$1.2572, amid Canadian Prime Minister Justin Trudeau’s early election call for Sept. 20, betting that high vaccination rates against the coronavirus and a post-pandemic economic rebound will help him prolong and strengthen his grip on power.

“The jump in the U.S. dollar comes from a combination of uncertainty over Delta, as China shut down a major port over safety, and the new geopolitical reality facing Afghanistan,” said Juan Perez, FX strategist and trader at Tempus Inc in Washington.

“Overall, the buck is indeed playing what could be a short-lived role as a safe haven because nothing is very clear other than the end of a very long-armed conflict others saw ending differently,” he added.

Thousands of civilians desperate to flee Afghanistan thronged Kabul airport on Monday after the Taliban seized the capital over the weekend, prompting the United States to suspend evacuations as it came under mounting criticism at home over its pullout.

Currencies overall stuck to broad trading ranges as investors were wary of taking large bets at the start of a busy week for central banks.

China’s July retail sales, industrial production and fixed asset investment were all weaker than expected as the latest COVID-19 outbreak weighed on the world’s second-biggest economy.

Long positions on the greenback swelled to their biggest levels since March 2020, suggesting the dollar’s recent move lower was more a temporary setback than the beginning of a structural downtrend.

The release of the Fed minutes this week will be key to the short-term outlook for the greenback, especially if it confirms more policymakers are leaning toward tapering its bond purchase plan by the end of the year.

Currency market volatility, even by its already low levels, is nearing 2021 lows thanks to the summer lull.

Elsewhere, minutes from the Reserve Bank of Australia’s latest meeting are due on Tuesday.

In cryptocurrencies, bitcoin fell 1.2% to $46,479 after hitting a three-month high of $48,190 over the weekend

• The dollar held near a four-month peak against major peers on Thursday after retreating overnight as a cooling in consumer inflation tempered bets for an earlier tightening of U.S. monetary policy.

  The dollar index, which measures the greenback against a basket of six rivals, was little changed at 92.890, following a 0.19% decline from Wednesday, when it rose as high as 93.195, a level not seen since April 1.

  The consumer price index rose 0.5% last month, in line with economist estimates but down from the 0.9% advance in June.

  Inflation eased in some areas where Fed policymakers had indicated price pressures would likely prove temporary, such as used cars.

  The Fed has made a labor market recovery a condition for phasing out its asset purchase program and raising interest rates, while generally viewing current inflationary pressures as transitory, although there has been debate about how long those pressures could last.

  The Fed is “likely to take some comfort” from the CPI report, David de Garis, an analyst at National Australia Bank, wrote in a note to clients.

  “For now, the focus returns more fully to the rate of improvement in the state of the labor market.”

  The euro was little changed at $1.1740, after retreating from a four-month low of $1.1706 on Wednesday, which brought it just two tenths of a cent from the weakest level since early November.

  The dollar eased 0.07% to 110.355 yen, continuing to pull back from a five-week high of 110.80 reached overnight.

  However, many analysts still expect the Fed to announce a tapering of stimulus this year, potentially as soon as next month.

  Kansas City Fed President Esther George said on Wednesday the standard for reducing the bond-buying program may have already been met by the current spike in inflation, recent labor market improvements and the expectation for continued strong demand.

  Dallas Fed President Robert Kaplan, in an interview with CNBC, said the U.S. central bank should announce its timeline for reducing massive bond purchases next month and start tapering them in October.

  In an interview with Reuters, Richmond Fed President Thomas Barkin said it may take a few months more for the U.S. job market to recover enough that the Fed can start to reduce its support for the economy.

  “The general consensus emanating from FOMC members currently is that the time to taper asset purchases is nearing,” Commonwealth Bank of Australia strategist Kim Mundy wrote in a research note.

  “Growing expectations for a near-term taper can support USD.”

  Mundy expects a taper announcement in September if jobs data for August remains strong.

  Elsewhere, bitcoin traded around $45,800 after touching $46,787.60 on Wednesday, the highest since mid-May.

  Smaller rival ether stood around $3,200 after advancing to $3,279.99 overnight for the first time since May 19.