FOREX-euro, pound set for biggest weekly gains since July, US payouts loom

(Prices updated at 1140 GMT)

By Ankur Banerjee and Alun John

SINGAPORE/LONDON, Nov 3 (Reuters) – The euro and pound rose on Friday, on course for their biggest weekly gain in four months, as a U.S.-led rise in global bonds sent yields lower and the dollar with them, bringing relief. even to a belligerent Japanese yen.

However, the always key US non-farm payrolls data due at 1230 GMT – the most important data point in a busy week – could change the story entirely.

The euro was last up 0.27% at $1.06515, on course for a weekly gain of 0.8%, which would be the biggest since July, thanks to early-week gains.

Sterling similarly rose 0.2% to $1.2228, setting a weekly gain of 0.86%, also the most since July.

The dollar’s slide after a very strong recent rally – the dollar index is down 0.6% for the week, just the third week of losses in the last 16 – reflects a decline in US yields. The benchmark 10-year U.S. Treasury yield is headed for a weekly decline of nearly 20 basis points, the most weekly since July.

This week’s drop was triggered by a combination of the US Treasury announcing a smaller-than-expected increase in longer-term Treasury supplies and Federal Reserve Chairman Jerome Powell appearing more confident when he indicated at a press conference that the Fed was done raising interest rates. Wednesday meeting.

Markets are now pricing in a less than 20% chance of a rate hike in December, compared with 39% at the start of the week, CME’s FedWatch tool showed, even as the Fed officially left the door open to raising borrowing costs further in the year in a nod to the economy’s resilience.

But the main event of the week, US earnings, is yet to come.

“We had a lot of events this week, the BOJ, the Fed, the Treasury refund, the BOE, but the most important is payrolls,” said Yusuke Miyairi, FX strategist at Nomura.

“If there’s a big miss, say 100,000 compared to the consensus, I think that’s when people could really start selling dollars, I don’t think we’re at that inflection point yet, but people’s sentiment is starting to move in that direction .” ” he said.

Meanwhile, if it gets strong, people will go back to buying dollars, he said.

Analysts believe U.S. nonfarm payrolls likely increased by 180,000 jobs in October, slowing from 336,000 in September, in part due to strikes by the United Auto Workers (UAW) union against Detroit’s “Big Three” automakers, which depressed manufacturing wages.

The Bank of England joined other major central banks on Thursday in holding rates steady, and while stressing it did not expect to start cutting them anytime soon, it added another nudge to bond growth.

The yen rallied on Friday as the dollar fell 0.2% to 150.19 yen, following a tumultuous week in which the Japanese currency touched a one-year low against the dollar and a 15-year low against the euro after the Bank of Japan revised its yield. curve control policy on Tuesday, but not by as much as markets had expected.

Central bank Governor Kazuo Ueda will continue to unwind his ultra-loose monetary policy and seek to exit a decade-long accommodative regime next year, Reuters reported on Thursday, according to six sources familiar with the central bank’s thinking.

The Australian dollar edged up slightly to $0.6444, just ahead of a more than one-month high of $0.6456 hit on Thursday.

Both the Australian and New Zealand dollars rose 1.7% for the week, their best weekly performance since mid-July.

However, the Swiss franc, which benefited from a safe-haven offer in October, weakened this week. The dollar is heading for a weekly gain of 0.25% against the franc and was last at 0.9041 francs.

(Reporting by Ankur Banerjee and Rae Wee in Singapore; Editing by Gerry Doyle, Kim Coghill and David Evans)

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