Dollar Near Multi-Month Highs; Employment Data Key

© Reuters.

By Peter Nurse

AiVIF.com - The dollar consolidated around multi-month highs against its major peers as traders await Friday’s key employment report for clues about future Federal Reserve policy.

At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded largely unchanged at 92.472, at a new two-month high.

This index has just posted its best month since November 2016, helped by the hawkish turn by the Federal Reserve in bringing forward its expected interest rate hikes.

USD/JPY was up 0.1% at 111.18, just below a new 15-month high, EUR/USD was down 0.1% at 1.1841, around the pair’s lowest level since early April, GBP/USD fell 0.1% to 1.3811, while the risk-sensitive AUD/USD was down 0.2% at 0.7482, approaching last week's six-month low at 0.7478.

The dollar received a boost on Wednesday as data showed U.S. companies hired more new employees than expected in June, adding to signs that the nation’s labor market is recovering strongly.

Private payrolls increased by a greater-than-expected 692,000 jobs last month, according to ADP Research Institute data released Wednesday, above the 600,000 jobs expected.

The ADP report is a widely-watched precursor to Friday’s official U.S. nonfarm payrolls release, although the relationship between the two hasn't been as tight as usual since the pandemic began.  But it is the official labor market report that carries more weight with the Fed. 

Ahead of the big release on Friday, the Labor Department will release jobless claims numbers, at 8:30 AM ET (1230 GMT), with first-time filings for unemployment insurance for the week ended June 26 seen falling to 390,000 from 411,000 in the previous period. Continuing claims are seen falling to 3.382 million from 3.39 million. 

The greenback has also been supported of late by the spread of the virulent delta strain of the Covid-19 virus, which is threatening the wider reopening narrative.

In Asia, the likes of Australia, Indonesia, Malaysia and Thailand have introduced new curbs to battle Covid-19 outbreaks, while in Europe the tourist season has been disrupted as Spain, Portugal and Greece restrict British travelers, given the rising number of cases in the U.K. A French government advisor, Jean-Francois Delfraissy, said on Thursday that it is already "too late" to stop the variant spreading in France, but said that the wave of Covid cases that he expects from Delta won't be as severe as previous ones.

Elsewhere, EUR/SEK rose 0.1% to 10.144 and USD/SEK climbed 0.1% to 8.5650 ahead of the latest meeting from Sweden’s central bank.

The Riksbank is expected to keep its benchmark interest rate and  asset-purchase program unchanged, but investors will be looking for clues of its timetable leading to its first post-pandemic interest-rate hike.