The dollar found support on Tuesday as investors awaited a European Central Bank meeting and U.S. data to gauge the policy outlook, while the Aussie blipped briefly higher after the Reserve Bank of Australia stuck with its tapering plans.
The greenback held the euro below $1.19 at $1.1872, was steady on the yen at 109.79 per dollar and drifted a little firmer on the Australian and New Zealand dollars at the end of the Asia session. The dollar index sat at 92.200.
The Reserve Bank of Australia stuck with plans to taper its bond buying but said it would extend the timeline as the economy struggles with coronavirus lockdowns, triggering a brief rise in the currency to $0.7469 before it eased back to support at $0.7420.
Traders said the next moves in currency markets probably depend on Thursday’s European Central Bank meeting and then on the next U.S. jobs update, in October, after a weak reading last week probably delayed any Federal Reserve tapering announcement.
“The next payroll report on Oct. 8 now looms very large as the main event in considering the timing of tapering,” said Natwest strategist John Briggs in a note to clients.
Tapering is also the focus for Thursday’s ECB meeting, with economists expecting some sort of slowdown in bond purchases but wobbles in the euro and a rising stock market are pointing to trading floors taking a slightly different view.
“If the ECB is going to taper that might provide some support for the euro,” said Moh Siong Sim, an FX strategist at the Bank of Singapore.
“But overall I don’t think it’s going to go hawkish - it’s going to...offset the tapering with a more flexible asset purchase program,” he said.
Elsewhere, sterling was marginally weaker at $1.3830 and the kiwi dipped slightly to $0.7117 with the Aussie late in Asia trade as the Aussie wound back its post-RBA jump.
The Central Bank said it would cut its bond buying by A$1 billion a week to A$4 billion, though it also extended the programme to at least mid-February which was seen as a dovish concession as lockdowns stall Australia’s economic recovery.
In cryptocurrencies, bitcoin and ether were steady at $52,736 and $3,927, respectively.
· Treasury yields rise, shrugging off disappointing jobs data
U.S. Treasury yields rose on Tuesday morning, continuing to shrug off last week’s disappointing jobs report, as the market opened back up after the Labor Day holiday on Monday.
The yield on the benchmark 10-year Treasury note rose 3 basis points to 1.353% at 3:50 a.m. ET.
· El Salvador bought $21 million of bitcoin as it becomes first country to make it a legal currency
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