U.S. Dollar Consolidated Gains Against its Rivals

The U.S. dollar continues to strengthen its positions against its rivals. On Monday, it rose against its rivals after four consecutive weeks of increases as widening concerns about the Chinese property sector as well as the firm U.S. Treasury yields encouraged hedge funds to ramp up their long positions.

After spending the second quarter of the year on the back foot the greenback received a fresh boost in recent weeks. It rose to its highest levels in a year against its rivals last week as major investment banks altered their forecasts. 

Other major currencies suffered losses against the dollar last week. At the moment, traders are monitoring the U.S. jobs data for September due on Friday. The state of the labor market is very important for the Federal Reserve. Therefore, it is not surprising that traders are closely monitoring the U.S. jobs data. 

Strategists from Citigroup expect more upside in the dollar due to challenges in the Chinese real estate sector. They also expect higher U.S. yields not driven by a global pandemic recovery and the negative impact for energy importers. 

Dollar, euro, and yen

The greenback’s gains were more visible against some of its top rivals. The dollar rose to a 14-month high against the euro. The dollar also reached a 19-month peak versus the yen last week as markets reckoned U.S. interest rates could rise ahead of global peers.

On Monday, the euro once again fell below $1.16.  At $1.1598 it is not far from the last week’s trough at $1.1563. 

The greenback was broadly steady at 93.96 after gaining for four consecutive weeks versus a basket of its rivals. 

The U.S. currency’s gains also infused life in the moribund currency volatility markets with a gauge measuring daily swings rising to its highest levels in 2-½ months at 6.2%.

Chinese markets are closed for a holiday, so traders attention will be firmly focused on monthly U.S. jobs data. Analysts expect that the jobs data will pave the way for U.S. policymakers to strike a more hawkish tone. 

The labor data for September is expected to show continued improvement in the job market. If the U.S. jobs data stay robust in a couple of months, the Federal Reserve hikes may not be far behind an end to tapering in 2022 according to Credit Suisse strategists.

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