Dollar Poised for Sixth Weekly Gain; Sterling Slips Ahead of Jobs Data

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The dollar remained steady in Asia on Friday and is poised to extend its longest winning streak in over a year, driven by rising bond yields and expectations for strong U.S. job growth.

This week, the dollar has gained 0.5% against the yen, reaching 158.405 yen, and nearly 1% against the struggling British pound, which has fallen to a 14-month low amid a selloff in gilts and concerns over British finances.

The dollar remains largely steady against the euro, at $1.0289, and has posted modest gains against the Australian and New Zealand dollars. The dollar index is on track for its sixth consecutive weekly rise, the longest streak since 2023, closing at 109.33 with a 0.4% weekly gain.

Chris Turner, global head of markets at ING, noted that the dollar's recent gains seem well-supported despite potential profit-taking risks, especially with U.S. jobs data due later in the day.

Sterling dropped 0.23% to $1.2278, having hit a 14-month low of $1.2239, while the Australian and New Zealand dollars remained near multi-year lows. The Aussie is at $0.61905, approaching its 2022 low of $0.6170, and the Kiwi is at $0.5587, nearing its 2022 low of $0.5512.

The U.S. non-farm payrolls report is expected to show an addition of 160,000 jobs in December, with unemployment holding steady at 4.2%. A stronger-than-expected report could further reduce the likelihood of Federal Reserve rate cuts and potentially spark another selloff in bond markets.

Philadelphia Fed President Patrick Harker indicated that rate cuts are anticipated, but not immediately necessary. Meanwhile, market expectations for U.S. rate cuts in 2025 have been scaled back to about 40 basis points, while concerns about President-elect Trump's inflationary fiscal policies have driven up long-term yields.

Ten-year Treasury yields have climbed nearly 9 basis points to 4.68%, up 96 bps since mid-September, while ten-year gilt yields have risen 22 bps to 4.805%. T

hese bond market fluctuations have even impacted cryptocurrencies, with Bitcoin falling 6% against the dollar this week to $94,066. Chris Weston of Pepperstone commented that many in the crypto community might not fully understand the dynamics behind these moves in U.S. rates and Treasuries.

 

 

 

 

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.