As investors awaited the U.S. jobs report to confirm economic resilience ahead of the Federal Reserve’s monetary policy meeting and a close U.S. presidential election next week, the dollar held steady against major peers on Friday.
After coming under pressure against the yen and on Thursday, the dollar of the United States started the month close to a one-week low.
However, investors weighed the outlook for the U.S. election and reduced their aggressive Fed rate cut bets in October, which saw the greenback experience its largest monthly gains in just over two years.
The week will come to a close with data on nonfarm payrolls in the United States. According to economists surveyed by Reuters, 113,000 new jobs were created in October, though analysts warn that the number could be affected by recent hurricanes.
According to senior FX analyst Sean Callow of InTouch Capital Markets, headline numbers could easily miss estimates, but a sustained market reaction should be limited.
According to analysts, the unemployment rate will probably provide a more accurate indicator of the state of the labor market as a whole. It is anticipated to reach 4.1%.
Callow stated, “Price for the Fed funds rate should not change much from (a 25 basis point cut) next week and likely another 25bp in December so long as it remains below 4.3%.”
Last week, the dollar index, which compares the dollar to six major currencies, increased by 0.09 percent to 103.97.
As domestic traders became more cautious ahead of a three-day weekend in Japan amid significant risk events, the yen lost some of Thursday’s gains, falling 0.31 percent to 152.49 per dollar.
However, despite Bank of Japan Governor Kazuo Ueda’s less dovish remarks following the central bank’s decision to stand pat on Thursday, the yen was still far from its three-month low of 152.885 earlier this week.
Morgan Stanley MUFG economists Takeshi Yamaguchi and Masayuki Inui wrote in a report on Thursday, “We think the chances of a Dec. rate hike have somewhat increased after Gov. Ueda’s press conference.”
Although they noted that factors such as the dollar/yen exchange rate and inflation data leading up to the year-end decision will be important, their base case remains for the BOJ to raise rates once more in January to 0.5 percent.
The Fed’s decision on monetary policy next week comes just a few days after Tuesday’s presidential election in the United States.
In several polls, Republican candidate Donald Trump and Democratic vice president Kamala Harris are still tied, but some investors have been placing bets that Trump will win, boosting the dollar and yields on the United States Treasury.
As seen as inflationary, Trump’s pledges to cut taxes, loosen financial regulations, and raise tariffs could slow the Fed’s policy easing.
A private sector survey found on Friday that China’s manufacturing activity returned to growth elsewhere in October as an increase in new orders fueled production growth.
Separate data indicated that new home prices in China increased more quickly in October.
The onshore yuan was 0.06 percent lower at 7.1219, while the offshore yuan was down about 0.12% at 7.1295 per dollar.
This week, data showed that inflation in the euro zone accelerated more quickly in October than anticipated. As a result, the euro’s value against the US dollar hovered around its two-week high. It was at $1.0877 at the end, down 0.06%.
After falling to its lowest level since mid-August at $1.28445 on Thursday, sterling remained largely unchanged at $1.2901.
The most valuable cryptocurrency by market cap, bitcoin, last sold for approximately $69,544.
