FOREX-Dollar Hits Highest Level In 3 Months As Wages Expected
* The dollar index reaches its highest level since April 6
* Aussie falls to December lows
* Swedish krona retreated after the Riksbank decision
* Chart: Global exchange rates https://tmsnrt.rs/2RBWI5E
By Ritvik Carvalho
LONDON, July 1 (Reuters) – The dollar index hit three-month highs on Thursday, ahead of a US jobs report that could offer clues as to when the Federal Reserve will start cutting measures stimulus.
The US currency hit 111.50 yen for the first time since March 25, 2020, up 0.3% on the day.
The dollar index, which measures the greenback against six counterparts, reached as high as 92.547 in early European trades, its highest since April 6.
The index posted its best month since November 2016 in June, spurred on by the Federal Open Market Committee (FOMC) ‘s surprise hawkish turn in the middle of this month, when policymakers reported two interest rate hikes from by the end of 2023.
Traders look to Friday’s report on non-farm wages in the United States to confirm this outlook, with economists polled by Reuters expecting a gain of 700,000 jobs last month, up from 559,000 in May, and a unemployment rate of 5.7% against 5.8% the previous month.
The greenback extended its gains on Wednesday after data showed the private sector payroll in the United States increased by 692,000 jobs more than expected in June.
“The end of 2Q21 was accompanied by additional dollar gains against all major currencies, as stronger-than-expected US ADP data, optimistic comments from the Atlanta Fed Chairman Bostic and lack of appetite for the market. Risk in most stock markets helped the greenback yesterday, ”said Roberto Cobo Garcia, FX Strategist at BBVA.
“The move continued today despite strong PMI figures in EMU and the risk to mood in commodities and equity markets.”
The euro edged down to $ 1.1851 after plunging to $ 1.1837 on Thursday for the first time since April 6, before recovering to trade flat after purchasing manager indices (PMI) of the euro zone are higher than expected.
Elsewhere in Europe, the Swedish krona plunged, losing 0.3% against the dollar to trade at 8.57 kroner to the dollar and 0.2% against the euro to 10.16 kroner to the euro.
The Swedish central bank kept its policy unchanged on Thursday.
Politicians across the country still struggled to form a new government after Social Democratic Prime Minister Stefan Lofven resigned after losing a vote of no confidence last week.
The Australian dollar, seen as an indicator of risk appetite, slipped 0.2% to $ 0.7476, hitting that level for the first time since December 21, Australia’s main centers of Sydney, Brisbane, Perth and Darwin are all stranded.
The Reserve Bank of Australia will meet next Tuesday to decide on its policy, and officials have already announced that it will announce its decisions on its three-year return target as well as its broader quantitative easing program, which is expected to end in September.
RBA Governor Philip Lowe will also hold a press conference afterwards, breaking with recent proceedings.
“If the RBA maintains a conciliatory tilt and does not take a step towards ending unconventional monetary policy, the AUD is unlikely to regain the losses suffered since the FOMC meeting,” wrote Joseph Capurso, strategist of Commonwealth Bank of Australia, in a client note.
“The AUD will remain heavy for at least the next few weeks,” perhaps testing $ 0.7442, he said.
The British pound slipped 0.1% to $ 1.3819, approaching a recent two-month low of $ 1.37865.
(Reporting by Ritvik Carvalho; additional reporting by Kevin Buckland in Tokyo; editing by Barbara Lewis and Simon Cameron-Moore)