- Dollar rises to Euro, Yen, Aussie and Kiwi
- As expected, RBNZ increases its cash rate to 0.5%
- ADP payrolls due 1215 GMT, + 428k jobs forecast
SINGAPORE, Oct. 6 (Reuters) – The dollar rose on Wednesday amid troubled trading amid heightened nervousness about global growth prospects and as traders waited for U.S. job data for an indication of when to tighten US federal policy.
The Reserve Bank of New Zealand raised its official currency rate for the first time in seven years, but the well-heralded increase was expected and the New Zealand dollar barely moved.
The kiwi was last 0.3% weaker at $ 0.6931 and the greenback saw similar gains elsewhere.
The euro traded below $ 1.16 and last bought $ 1.1590, barely higher than the 14-month low of $ 1.1563 it hit last week. The yen fell to a weekly low of 111.64 per dollar and was within the range of the 18-month low of 112.08 it hit last Thursday.
The Australian dollar weakened 0.3% to $ 0.7267.
The greenback has gained support as investors prepare for the Federal Reserve to begin curbing bond purchases this year, laying the groundwork for an exit from the pandemic-era interest rates well before central banks in Europe and Japan.
“Interest rate differentials are having a greater impact on currencies than they have been in a long time,” said Kim Mundy, an analyst at the Commonwealth Bank of Australia in Sydney, as an era of suppressed super-low interest rates comes to an end.
“Now that the Fed is starting to rejuvenate and hold out the prospect of an exit, we think we could see market prices rise for rate hikes, which will help prop up the USD,” she added.
Fed fund futures markets are priced with rate hikes starting around November 2022, but expect rates to rise at just over 1% through most of 2025, despite Fed members getting rates of 1.75 for 2024 % forecast.
The U.S. non-farm wage numbers due Friday are seen as critical to the Fed’s tone and timing, especially if the numbers impress or disappoint. Personal pay slips, a sometimes unreliable guide, are due at 1215 GMT.
A huge miss of market expectations of around 428,000 new jobs in September could dampen expectations for the broader number on Friday, which is forecast at 473,000.
GIVE UP DOLLARS
Elsewhere, commodity-linked currencies received support from oil prices, which rose to three-year highs. The Canadian dollar is near a one-month high and is about to test its 200-day moving average. The Canadian dollar hit a 19-month high against the euro overnight.
Sterling has recovered somewhat from last week’s sharp sell-off against the dollar, but lost momentum during the Asian session, stabilizing at $ 1.3616 and just below the euro’s three-week high on Tuesday.
In New Zealand, a 25 basis point rate hike and the central bank’s well-known restrictive tone did not prove to be an event for traders and did little to change the currency or expectations for further rate hikes in November and February.
“We are on our way to a number of rate hikes and the market is well-rated for them,” said Jason Wong, senior market strategist at BNZ in Wellington. For the kiwi, that means “the US dollar is in charge,” he said.
“This is really about the Fed, but what we’re seeing around the world in China and the energy crisis in Europe are all contributing to making the markets nervous, which is helping the dollar.”
================================================ == ====
Currency bid prices at 0220 GMT
Tokyo Forex Market Information from BOJ
Reporting by Tom Westbrook; Adaptation by Lincoln Feast & Simon Cameron-Moore
Our standards: The Thomson Reuters Trust Principles.