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Dollar wavers with ECB minutes and Friday's U.S. jobs data in focus

10/06/2022 | 04:45am EST

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Dollar struggles to hold Wednesday surge

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ECB minutes eyed

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Oil price rise increases stress on euro and sterling, boosts exporters

SYDNEY/LONDON, Oct 6 (Reuters) - The dollar wobbled lower on Thursday, resuming its slide from early in the week, as investors looked ahead to U.S. labour and inflation data for any sign of softness that could signal an eventual slowdown in U.S. rate hikes.

After surging on Wednesday, the greenback struggled to hold its gains, and the euro climbed around 0.3% to as high as $0.9927, trying but failing to break back above parity against the dollar, but holding clear of its 20-year low of $0.9528 hit last week.

The European Central Bank releases minutes from last month's policy meeting later in the day, which will be scrutinised by traders for any light they could shed about the size of the next European rate hike.

Sterling gained 0.35% to $1.1359, and the dollar also slipped 0.5% against the Swiss franc to 0.9791 francs.

"Sentiment was very downbeat in late Q3, couldn’t go anywhere but up, did go up in early Q4, triggered by the Bank of England intervening (in British government bond markets)," said Stephen Gallo European head of FX strategy at BMO capital markets.

"We don’t really have fundamentally good reasons to be buying sterling, euro or yen aggressively but we all know the dollar is expensive and maybe the Fed is wrong, and it is going to have to pivot."

A major factor driving currency markets currently is changing expectations of how aggressively central banks' - particularly the Federal Reserve - will raise interest rates.

A key question is whether they will pivot from primarily worrying about inflation, and hence raising rates aggressively, to also considering slowing economic growth, leading to more cautious rate hikes.

This means U.S. jobs data due on Friday and inflation figures next week will be closely watched.

"Investors will be looking (in Friday's payrolls report) for signs of anything that might cause the Fed to do an early pivot, everything they say suggests they have no intention of doing so, but I suspect there are people out putting these pivot trades on," said Gallo.

U.S benchmark treasury yields whose gains on Wednesday had helped drive the greenback higher, were steady on Thursday.

An unexpectedly modest 25 basis point hike in Australia this week raised hopes other central banks may temper their tightening soon, too.

Interest rate futures imply more than 130 basis points of tightening ahead for the Fed before the middle of next year.

Australian dollar was at $0.6484. The New Zealand dollar, riding an additional boost from a resolutely hawkish central bank hike on Wednesday, made a two-week peak of $0.5810.

The yen, which has been held steady by the risk of further Japanese intervention, was little changed at 144.56 per dollar.

The Saudi Arabia-led cartel of oil producers agreed to steep production cuts on Wednesday, lifting Brent crude futures to a three-week high of $93.99 a barrel.

That helped the Norwegian crown and Canadian dollar outperform most peers, while hurting currencies like the euro and pound.

"Higher energy prices would have a much more direct impact on the European region given the more direct relationship to their finances," said NatWest Markets' strategist Jan Nevruzi.

(Reporting by Tom Westbrook; Editing by Shri Navaratnam, Lincoln Feast and Kim Coghill)


ę Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / CANADIAN DOLLAR (AUD/CAD) -0.06% 0.91556 Delayed Quote.-0.29%
AUSTRALIAN DOLLAR / EURO (AUD/EUR) 0.00% 0.64575 Delayed Quote.0.89%
AUSTRALIAN DOLLAR / JAPANESE YEN (AUD/JPY) 0.34% 91.941 Delayed Quote.9.16%
AUSTRALIAN DOLLAR / NEW ZEALAND DOLLAR (AUD/NZD) -0.14% 1.06224 Delayed Quote.-0.20%
AUSTRALIAN DOLLAR / SWISS FRANC (AUD/CHF) 0.10% 0.63854 Delayed Quote.-3.93%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.22% 0.68276 Delayed Quote.-6.47%
BRENT OIL -0.99% 86 Delayed Quote.11.95%
BRITISH POUND / AUSTRALIAN DOLLAR (GBP/AUD) 0.04% 1.80518 Delayed Quote.-2.89%
BRITISH POUND / EURO (GBP/EUR) 0.00% 1.16605 Delayed Quote.-2.03%
BRITISH POUND / JAPANESE YEN (GBP/JPY) 0.38% 165.978 Delayed Quote.6.01%
BRITISH POUND / SWISS FRANC (GBP/CHF) 0.11% 1.15297 Delayed Quote.-6.76%
BRITISH POUND / US DOLLAR (GBP/USD) 0.25% 1.23262 Delayed Quote.-9.16%
CANADIAN DOLLAR / EURO (CAD/EUR) 0.02% 0.705562 Delayed Quote.1.18%
CANADIAN DOLLAR / JAPANESE YEN (CAD/JPY) 0.42% 100.413 Delayed Quote.9.48%
CANADIAN DOLLAR / SWISS FRANC (CAD/CHF) 0.05% 0.69751 Delayed Quote.-3.69%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.29% 0.74567 Delayed Quote.-6.18%
CHINESE YUAN RENMINBI / SWISS FRANC (CNY/CHF) 0.52% 0.134379 Delayed Quote.-7.04%
DANISH KRONE / SWISS FRANC (DKK/CHF) 0.13% 13.245 Delayed Quote.-4.83%
EURO / AUSTRALIAN DOLLAR (EUR/AUD) 0.04% 1.54795 Delayed Quote.-0.88%
EURO / JAPANESE YEN (EUR/JPY) 0.38% 142.339 Delayed Quote.8.20%
EURO / SWISS FRANC (EUR/CHF) 0.13% 0.98871 Delayed Quote.-4.83%
EURO / US DOLLAR (EUR/USD) 0.25% 1.05702 Delayed Quote.-7.30%
HONGKONG-DOLLAR / SWISS FRANC (HKD/CHF) 0.10% 12.041 Delayed Quote.2.63%
INDIAN RUPEE / EURO (INR/EUR) -0.64% 0.011589 Delayed Quote.-1.07%
INDIAN RUPEE / JAPANESE YEN (INR/JPY) -0.02% 1.650465 Delayed Quote.6.83%
INDIAN RUPEE / SWISS FRANC (INR/CHF) -0.35% 0.011464 Delayed Quote.-5.99%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.18% 0.012262 Delayed Quote.-8.43%
JAPANESE YEN / SWISS FRANC (JPY/CHF) -0.27% 0.6946 Delayed Quote.-12.11%
NATWEST GROUP PLC 1.75% 261.9 Delayed Quote.7.75%
NEW ZEALAND DOLLAR / JAPANESE YEN (NZD/JPY) 0.50% 86.544 Delayed Quote.9.40%
NEW ZEALAND DOLLAR / SWISS FRANC (NZD/CHF) 0.25% 0.60116 Delayed Quote.-3.74%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.37% 0.64266 Delayed Quote.-6.26%
RUSSIAN ROUBLE / SWISS FRANC (RUB/CHF) -0.20% 0.015097 Delayed Quote.24.47%
S&P GSCI BRENT CRUDE INDEX 0.40% 730.2136 Real-time Quote.11.70%
SINGAPORE-DOLLAR / SWISS FRANC (SGD/CHF) 0.23% 0.6947 Delayed Quote.2.25%
SWEDISH KRONA / SWISS FRANC (SEK/CHF) 0.33% 0.091323 Delayed Quote.-9.91%
US DOLLAR / EURO (USD/EUR) -0.25% 0.946056 Delayed Quote.7.87%
US DOLLAR / JAPANESE YEN (USD/JPY) 0.13% 134.65 Delayed Quote.16.70%
US DOLLAR / SWISS FRANC (USD/CHF) -0.13% 0.93539 Delayed Quote.2.67%
WTI -0.80% 80.489 Delayed Quote.6.45%
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