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Dollar bills

Dollar keeps gains before the U.S. jobs data

The dollar was going for a second continuous week of gains versus major rivals on Friday ahead of a critical U.S. jobs report.

Following a string of central banks, this week launched back, facing a faster tightening of monetary policy.

Investors will be strictly following new U.S. labor market data due later on Friday, which could affect the timing of Federal Reserve interest rate increases.

The dollar index (DXY) gauges the dollar versus a basket of six competitors. Over the past fortnight, it has increased almost 1%. It has solidified its gains on Friday, up 0.1% before the jobs data at 94.452.

This week, investors had to reset monetary policy expectations following some of the most influential global central banks’ knocked-back bets for early rate hikes.

On Thursday, the Bank of England’s choice not to raise rock-bottom benchmark rates established the most significant shock for markets. This drove sterling to its largest one-day fall in more than 18 months by as much as 1.6% on the day.

Sterling dropped an additional 0.4% on Friday, catching a fresh one-month low of $1.34390.

Earlier in the week, the Reserve Bank of Australia also held its dovish stance, notwithstanding inflationary pressure and controlled rates. The Aussie is on course for an almost 2% weekly decline and was last under 0.3% on the day at $0.73795.

European Central Bank President Christine Lagarde started back on Wednesday versus market bets for a rate hike as soon as next October and stated it was doubtful such a move would happen in 2022.

Fed sets market recovery as a condition

On Wednesday, Fed Chair Jerome Powell stated he was in no hurry to hike borrowing costs, even as the Federal Open Market Committee published a $15 billion monthly tapering its $120 billion in monthly asset acquisitions.

The Fed has set a labor market improvement as a requirement for a rates lift-off. Economists project U.S. non-farm payrolls expected later on Friday to show a 450,000 increase in jobs in October. They base this rise following a 194,000 advance in the prior month.

 Westpac strategists wrote in a client note that the FOMC had a ‘dovish taper’. However, the USD is still better placed than most.

The euro changed slightly at $1.15420 after falling 0.5% overnight. Meanwhile, the dollar was harshly flat versus the yen at 113.745 yen.

Bitcoin was about $62,000, having primarily traded sideways after hitting its all-time high of over $67,000 last month.

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