Sunday, October 17

Dollar firm ahead of payrolls; kiwi awaits RBNZ decision


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SINGAPORE — The dollar hovered close to its

highs for the year in choppy trade on Wednesday as investors’

focus turned to US jobs data and to a likely rate hike in New

Zealand.

The euro is pinned near a 14-month low of $1.1563

it struck last week and last bought $1.1599, having slipped 0.2%

overnight. The safe-haven yen also dropped overnight,

falling about 0.5% reflecting a positive mood in equity markets.

The yen began the Asia session at around 111.50 per dollar.

The greenback has won support from investors lately as they

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brace for the Federal Reserve to begin to taper asset purchases

this year and lay the groundwork for rate hikes before peers,

while the euro – in particular – has languished.

US non-farm payrolls data due on Friday is seen as crucial

to informing the Fed’s tone and timing, especially should the

figures wildly impress or disappoint. Private payrolls figures,

a sometimes unreliable guide, are due around 1215 GMT.

A large miss on market expectations for around 428,000 jobs

to have been added in September could dampen expectations for

Friday’s broader figure, said Commonwealth Bank of Australia

analyst Carol Kong.

“We maintain our view that a solid improvement in Friday’s

payrolls will prompt the (Fed) to announce a taper in November,”

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she said.

Elsewhere, commodity-linked currencies drew support from oil

prices, which have surged to three-year highs. The Canadian

dollar sits near a one-month peak and is close to

testing its 200-day moving average. Against the euro, the

Canadian dollar hit a 19-month high.

The Australian dollar was also supported, but was

held back from gains by worries about fragile growth in China –

a top market for Australian commodity exports. The Aussie was

last steady at $0.7289 and the kiwi was becalmed at $0.6960.

The Reserve Bank of New Zealand (RBNZ) announces policy

settings at 0100 GMT and is all but certain to deliver the rate

hike that it delayed in August amid a COVID-19 outbreak in

Auckland.

Swaps markets have priced a 97% chance of a 25 basis point

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hike and a roughly 90% chance of another one in November, but

analysts said the currency could be sensitive to the

central bank’s tone.

“We expect a hike and so do markets, so a pause would be a

shock,” said analyst at ANZ Bank.

“Presuming they do hike, that will put extra carry on the

table, which should in theory be positive. But near term

enthusiasm may end up being dampened by the RBNZ’s tone,

especially if they are dovish, as we expect.”

Overnight, sterling recovered a little more of its

sharp selloff against the dollar and it steadied at $1.3628 in

early Asia trade. It touched a three-week high of 85.00 pence

against a broadly weaker euro overnight.

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Currency bid prices at 2329 GMT

Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar $1.1595 $1.1597 -0.02% -5.10% +1.1600 +1.1595

Dollar/Yen 111.4900 111.4200 +0.08% +7.96% +111.5100 +111.5100

Euro/Yen

Dollar/Swiss 0.9284 0.9283 +0.00% +4.92% +0.9284 +0.0000

Sterling/Dollar 1.3625 1.3622 +0.05% -0.25% +1.3629 +1.3626

Dollar/Canadian 1.2585 1.2581 +0.04% -1.16% +1.2586 +1.2579

Aussie/Dollar 0.7288 0.7291 -0.04% -5.26% +0.7293 +0.7288

NZ 0.6956 0.6957 +0.00% -3.12% +0.6964 +0.6957

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(Reporting by Tom Westbrook; Editing by Lincoln Feast.)

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