The U.S. dollar, known as the greenback, traded flat against major currencies on Friday ahead of the U.S. non-farm payrolls report. It was expected to provide traders with additional information regarding the pace of the Fed’s policy normalization.
The country’s central bank said it is likely to reduce its monthly bond purchases as soon as November. The Fed could also make other important decisions as it moves from the pandemic-era policies. The state of the labor market is a significant factor. The world’s largest economy suffered heavy losses due to the pandemic. Millions of people across the country lost their jobs in 2020.
The non-farm payrolls data is expected to show continued improvement in the country’s labor market, with a consensus forecast of 500,000 jobs added in September.
The U.S. Dollar Currency Index, which measures the greenback against a basket of six peers, gained 0.1% 94.338. At the time of writing, it stood at 94.164.
The greenback added 0.3% to 111.96 yen and touched 111.975, the highest level this month, helped by higher Treasury yields. The benchmark 10-year bond reached 1.6010% for the first time in several months.
Neil Jones from Mizuho Bank expects the yen to decline to 115 yen per dollar by the end of December. Jones said central bank divergence would remain in place as the central bank’s hike rates while Japan remains on hold within a higher inflationary backdrop.
Dollar, euro, pound, and other currencies
The single currency consolidated around $1.1562 after weakening on Wednesday to a 14-month low of $1.1529.
The Australian dollar fell 0.2% to $0.7299, following a 0.55% surge on Thursday. The Aussie earlier touched $0.7324 for a second day running, the strongest level since September 16. The Aussie made “ a decent go at breaking higher.” Nevertheless, the test will be whether it can stay at about $0.7315.
The British pound added 0.1% to $1.3624, holding on to most of a 0.26% gain from Thursday. One day earlier, new Bank of England Chief Economist Huw Pill said inflation pressures were proving stickier than initially thought.
Another significant currency, the Canadian dollar, was little changed at C$1.2548 per greenback. Thanks to oil prices, it stood at C$1.2548 after earlier strengthening to a one-month peak of C$1.2534.