(Bloomberg) -- The gauge of the dollar advanced against all of its peers in the Group of 10. Earlier, the dollar earlier traded lower as US hiring fell short of forecasts in August after downward revisions to the prior two months, fueling bets on a jumbo interest-rate reduction by the Federal Reserve this month.
- The Bloomberg Dollar Spot Index fell as much as 0.5% before paring losses and gaining about 0.1%
- “Market was way too short USD into this report,” said Brad Bechtel, global head of FX at Jefferies Financial Group Inc., explaining the dollar gains. “It’s profit taking”
- Fed-dated OIS contracts extend their dovish shift following August jobs data, with the September contract’s rate dropping as low as 4.955%, indicating it’s a coin flip whether the central bank cuts rates by 25bp or 50bp on Sept. 18
- “The data today is not an obvious 50 basis-point cut,” said Sarah Ying, head of currency strategy at CIBC Capital Markets in Toronto
- “We’ve had some upside surprises on the inflation front this week, with prices paid up for both manufacturing and services up as well as today’s strong average hourly earnings read,” said Win Thin, global head of markets strategy at Brown Brothers Harriman. “I think next week’s CPI and PPI data had become an afterthought but now, they could be the tipping point between 25 and 50 bp this month”
- “Next week‘s US presidential debate is the next market catalyst,” Bank of America strategists wrote in a note. “We remain bearish USD”
- READ: Fed’s Williams Says Now Appropriate to Lower Interest Rates
- USD/CAD rose 0.1% to 1.3515
- Canada’s economy added jobs for the first time in three months, but the unemployment rate surprisingly jumped to the highest level since the pandemic as the expanding pool of new workers are unable to find work
- “The rise in Canada’s unemployment rate, especially when coupled with the US unemployment rate coming back down, is keeping CAD depressed,” said Helen Given, FX trader from Monex. “I do see a much better chance of likely two more 25 basis-point cuts from Bank of Canada to come this year”
- USD/JPY rose 0.3% to 143.83 after falling as much as 1% to 142.01
- EUR/USD fell as much as 0.4% to 1.1066
- Germany’s industrial production fell more than economists expected in July
- ECB won’t react to a weakening eurozone economy by lowering interest rates more rapidly, according to a survey of analysts
- USD/CHF climbed as much as 0.4% to 0.8476
- Earlier, right after the US report it fell as much as 0.8%, touched the lowest this year before pairing the move
- AUD/USD slips 0.4% to 0.6716
- Some information comes from FX traders familiar with the transactions who asked not to be identified because they aren’t authorized to speak publicly
Reporting by Anya Andrianova and Vassilis Karamanis With assistance from Masaki Kondo and Matthew Burgess.
