(Bloomberg) -- The dollar weakened against nearly all Group-of-10 peers in the developed world as focus shifted to US payrolls report Friday. The Swiss franc and euro were among among best performers in the group.
- The Bloomberg Dollar Spot Index fell 0.3%, heading for a second day of losses
- “I see some hedging against the dollar in preparation for NFP tomorrow morning — seems like traders are thinking there is a good chance of an undershoot,” said Helen Given, a foreign-exchange trader at Monex, adding that there can be “an upside surprise” as well
- The dollar strength to continue into next year, allowing the greenback can stay close to current levels or a bit higher, according to John Flahive, head of fixed income at BNY Mellon Wealth Management, citing continuation of the interest-rate differential and US economic growth outperformance against the rest of the world
- “We are not looking for a massive dollar appreciation, we are not overly bullish,” he said about next-year performance
- He expects the Federal Reserve to lower borrowing costs by 25 basis points at the December meeting
- USD/JPY drops as much as 0.6% to 149.66 before steadying above the 150 handle
- Bank of Japan Board Member Toyoaki Nakamura said he didn’t object to an interest-rate hike, though is watching the data
- Two-week volatility now captures the next Fed and BOJ meetings and rose to one-month high
- EUR/USD advance 0.5% to 1.0568, up a third day
- Emmanuel Macron needs to find a premier who can pass a 2025 budget through a deeply divided parliament; a sale of French debt skewed toward longer maturities received solid demand from investors
- GBP/USD up 0.4% to 1.2753 amid bullish technical signals
- USD/SEK fell 0.4% to 10.88
- Goldman Sachs initiated a trade recommendation long USD/SEK with target of 11.25, stop at 10.75
- This trade is “our preferred hedge for higher for longer rates in the US,” strategist Karen Reichgott Fishman wrote in a note
- This also provides a “better risk-reward at current levels for protection against a broader trade war that more significantly worries markets,” she wrote
- 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
