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TOKYO – The dollar rallied against its major peers on Monday, hitting a four-month high against the euro as traders position themselves for an early cut in Federal Reserve stimulus measures.
The greenback strengthened to $ 1.1742 against the single currency, extending a 0.6% increase from Friday, when a strong US jobs report fueled the bets that a reduction in asset purchases could start this year and that higher interest rates could follow as early as 2022.
The dollar index, which tracks the US currency against six rivals, hit a two-week high at 92.915.
END OF ADDITIONAL UNEMPLOYMENT BENEFITS FOR 7.5M WORKERS IN SEPTEMBER
The dollar also hit a nearly two-week high at 110.37 yen.
“The American payroll has been a game-changer,” wrote Chris Weston, head of research at brokerage Pepperstone in Melbourne, in a client note.
The dollar rallied against its major peers on Monday, hitting a four-month high against the euro, as traders positioned themselves for an early cut in Federal Reserve stimulus measures. Photo by Pavlo Conchar / SOPA Images / LightRocket via Getty Images
The dollar index is eyeing a close above 93, while the currency could head towards $ 1.1704 per euro, Weston wrote, adding that it could rise further against the yen if US yields continue. to climb.
The benchmark 10-year Treasury yield jumped 8 basis points on Friday to a two-week high of 1.3053%. There were no exchanges in Tokyo on Monday as Japan was closed for a national holiday. Singapore markets have also been closed.
Friday’s non-farm payroll report showed jobs increased by 943,000 in July from the 870,000 forecast by economists in a Reuters poll. The figures for May and June have also been revised upwards.
The Fed has made the labor market recovery a condition for tightening monetary policy, and most officials support the idea that a surge in inflation will prove to be transitory, although there is a debate on its duration.
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Traders will be watching a US consumer price report closely on Wednesday.
Last week, Fed Vice President Richard Clarida suggested the conditions for an interest rate hike could be met by the end of 2022.
The dollar rallied against its Australian and New Zealand counterparts on Monday, jumping 0.3% to $ 0.7330 per Aussie and up 0.4% to $ 0.6980 per kiwi.
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