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Dollar drifts below one-year high as payrolls test looms large By Reuters


© Reuters. FILEPHOTO: This illustration shows an American dollar banknote taken May 26, 2020. REUTERS/Dado Ruvic/Illustration/File Photo

Kevin Buckland

TOKYO, Reuters – On Tuesday the U.S. Dollar fell below a 1-year high against major peers as traders waited for key U.S. payrolls information at the end the week to get clues about the timing of a tapering Federal Reserve stimulus and when interest rate rises would begin.

Australian dollars traded unchanged at $0.72905 on Wednesday, a 3 day gain from $0.73045 the previous day. The Reserve Bank of Australia meets Tuesday. Reuters polled economists and they all predicted no change in the policy rate.

New Zealand’s dollar held near its previous four-day peak of $0.6981. After three days, it traded at $0.6960. The market is priced to see a quarter-point rate increase when the central bank of New Zealand decides on Wednesday.

At 93.845 the, which compares six currencies, was flat. It has been slightly declining since its peak Thursday, at 94.504 (highest since September 2020).

It followed a rally as high as 2.8% in September 3rd as traders rush to price tapering next month. There were also possible rate increases next year. Currency also enjoyed safe-haven demand amid concerns about the global stagflation risk and U.S. debt ceiling negotiations.

Mark McCormick (NYSE) – the global head for FX strategy at TD Securities wrote that there was a lot of negative global news which is priced in the USD. The key to markets’ success in coming weeks is to determine the degree of risk premium that has been priced in and how they will play out.

McCormick explained that while the USD bias in the short-term is stronger, McCormick was cautious about following the USD move at these levels.

Friday’s nonfarm payrolls data will show continued improvements in the labour market. According to Reuters poll, 488,000 additional jobs are expected in September. That’s enough for the Fed to maintain its course of tapering by the end.

Canada’s dollar was trading near a one-month peak of C$1.2558 per greenback, which it reached Monday. It edged 0.1% to C$1.2599 on Monday, buoyed by’s rally towards a three year high.

Sterling was close to a 4-day high of $1.3640. The last change in hands came at $1.36005.

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