Tom Westbrook

SINGAPORE, (Reuters) – The dollar hovered near its highest for the year on Wednesday in choppy trading as investors focused on U.S. job data and a possible rate increase in New Zealand.

After falling 0.2% overnight, the euro remains close to a low of $1.1563 for 14 months. It was last purchased $1.1599 last week. Overnight, the safe-haven Japanese yen fell 0.5%. This is a sign of a more positive mood on equity markets.

In Asia, the yen was at 111.50 dollars for its opening session. Investors have been supporting the greenback as they wait for the Federal Reserve’s tapering of asset purchases in the new year. This will lay the foundation for rates hikes ahead of peers. The euro, however, has suffered.

U.S. nonfarm payrolls data is due Friday. This information will help the Fed determine its tone and timing. The private payrolls data, which can sometimes be unreliable, is due at 1215 GMT.

Carol Kong from Commonwealth Bank of Australia, analyst said that a significant miss in market expectations of approximately 428,000 new jobs added to September may lower Friday’s wider figure.

“We remain our opinion that Friday’s payrolls are solidly improving will cause the Fed (Fed), to announce a taper on November,” she stated.

Other commodity-linked currencies have also been supported by oil prices which are at three-year record highs. Canadian dollars are nearing a one month peak, and close to reaching their 200-day moving mean. The Canadian dollar reached a 19-month peak against the euro.

Although the Australian dollar gained support, it was put on hold by concerns about China’s fragile growth. China is a major market for Australian commodities exports. Last steady was $0.7289, and was becalmed to $0.6960.

The Reserve Bank of New Zealand announces its policy settings at 0100 GMT. It is likely to implement the rate rise it delayed in August due to a COVID-19 pandemic in Auckland.

Swap markets price a 97% probability of a 25-basis point increase and an approximately 90% chance for another in November. However, analysts noted that the currency may be sensitive to central bank tone.

Analyst at ANZ Bank stated that “We anticipate a hike, and markets do too. So a pause wouldn’t be a surprise.”

If they hike, this will add more carry to the equation, which in theory should be good. The RBNZ may dampen enthusiasm in the near future, particularly if they remain dovish like we expect.

Sterling was able to recover some of its selloff against dollar overnight, and traded at $1.3628 for early Asia trade. Overnight, it reached a 3-week high of 85.00pence against the euro which was much weaker.

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Prices for currency bids at 2329 GMT

Description U.S. Close RIC Pct Change Pct High Low Bid

1. Previous changes

Session

Euro/Dollar

$1.1595 $1.1597 +0.02% -55.10% +1.1600

Dollar/Yen

11.4900 111.4200 +0.08% (+7.96%+1111.5100+111.5100

Euro/Yen

129.28.25 +0.02% -1.86% +129.3600 -129.2400

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 and 0.7288

NZ

Dollar/Dollar 0.6956 0.6957 +0.00% -3.12% +0.6964 +0.6957

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