Jobs jump lifts kiwi; dollar waits for payrolls
The dollar was pinned near recent lows on Wednesday as investors awaited U.S. jobs data for a guide on the interest rate outlook, while a drop in unemployment in New Zealand lifted the kiwi in anticipation that rate hikes could begin there within weeks.
Labour markets are in focus the world over as a bellwether for policy shifts, since central bankers from Wellington to Washington have said a job recovery is a precondition for raising rates.
A sharp drop in New Zealand’s unemployment rate, which fell to 4% last quarter, sent the kiwi 0.6% higher to a one-month top of $0.7066 as swaps markets fully priced in a 25-basis-point cash rate hike in August.
Opposite concerns seemed to weigh on the greenback, as doubts over the economic recovery creep in to bond and currency markets, with partial jobs data due later on Wednesday and non-farm payroll figures due on Friday the next focus.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 92.017 — above levels below 92 seen earlier in the week.
The U.S. dollar fell marginally on the euro during the Asia session to touch $1.1875 against while stubbornly low U.S. yields gave support to higher-paying Asian currencies.
Economists polled by Reuters expect ADP payrolls data, due around 1215 GMT, to show 695,000 jobs were added last month - roughly steady on a month earlier - and for Friday’s non-farm payrolls to show 880,000 jobs added in July.
A speech at 1400 GMT from Federal Reserve Vice Chair Richard Clarida will be closely watched for any clues on policymakers’ thinking.
Also in focus later on Wednesday will be Eurozone retail sales data and a U.S. services survey, with both watched for readings on the state of the economic recovery.
Sterling was steady ahead of a Thursday Bank of England meeting, buying $1.3927 with traders eying the $1.40 mark should policymakers sound hawkish about tapering bond purchases or hiking rates.
The Thai baht is teetering on the brink of a multi-year trough as rates are expected to be low for a long time, while Brazil’s central bank is seen lifting rates by a full percentage point to tame runaway inflation.
Reference: Reuters
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