By Tom Westbrook
SINGAPORE (Reuters) – The dollar looked set to extend its longest weekly winning streak in over a year on Friday, underpinned by rising bond yields and expectations of another strong set of U.S. jobs numbers.
The dollar has gained 0.5% on the yen this week to buy 158.03 yen and added more than 1% on an ailing British pound, which was battered to a 14-month low in tandem with a selloff in gilts and concern about British finances.
The dollar is set for a broadly steady week on the euro, which buys $1.0926 and it has notched small gains on the Australian and New Zealand dollars. [AUD/]
The dollar index is set for a sixth consecutive weekly gain, its longest run since an 11-week streak in 2023 as the U.S. economy continues to seem strong in contrast with weaknesses elsewhere.
The index was steady in the Asia morning on Friday for a 0.25% weekly rise to 109.18.
“We doubt the dollar needs to hand back much of its recent gains,” said Chris Turner, global head of markets at ING, noting a shakeout in sterling long positions and risks to the upside for the dollar from U.S. jobs data due later in the day.
“Despite the risk of profit-taking, (the dollar index) found good support under 108 earlier this week.”
Sterling was last a fraction weaker at $1.2295, having touched a 14-month low of $1.2239 earlier in the week. The Australian and New Zealand dollars are huddled near multi-year lows, with the Aussie – last at $0.6190 – having come within a whisker of breaking a 2022 low of $0.6170.
The New Zealand dollar is also testing its 2022 low of $0.5512 and was last at $0.5594.
PAYROLLS
U.S. non-farm payrolls data is expected to show 150,000 jobs were added in December, with unemployment holding at 4.2%.
A hint of anything much stronger would add to the case for fewer Federal Reserve rate cuts and may set off another round of selling in jittery bond markets.
Overnight Philadelphia Fed President Patrick Harker said he expects the U.S. central bank to cut interest rates, but added that an imminent move down isn’t needed.
Markets have already scaled back expectations to around 40 basis points of U.S. rate cuts for 2025, while concerns about President-elect Donald Trump’s potentially inflationary agenda have helped drive up longer-term yields.
Ten-year Treasury yields have climbed nearly 9 basis points this week to 4.68% and are up 96 bps since mid September. [US/]
Ten-year gilt yields are up 22 bps this week to 4.805%. [GB/]
Unusually, the ructions in the bond market seem to have been felt by cryptocurrencies, with bitcoin down 5.7% on the dollar through the week to $92,600.
“I’m not sure how many in the crypto scene would have been aware of … the dynamics shaping up in U.S. rates/Treasuries, and many will be questioning the factors behind the move in crypto,” said Pepperstone’s head of research, Chris Weston.