The dollar rose on Wednesday ahead of Friday’s key US jobs data, as speculation that the Fed will raise rates later this year increases.
The dollar hit a four-week high against the yen, pushing sterling down to a three-year low.
“By and large the dollar is continuing to trade well,” Societe Generale strategist Alvin Tan told Reuters.
“Expectations about the Fed raising rates are edging up and that has been helped by the good run of U.S. data … The big one though is tomorrow with the non-farm payrolls report.”
Friday’s US non-farm payroll figures will be closely watched by the markets, with investors looking for signs that the labour market is strong enough for the Fed to raise rates in December. The median forecast of economists polled by Reuters is for payrolls to rise by 175,000.
However gold, which has been seen as a safe haven of late, sank on the news. The price dropped to three and a half month low as the threat of tighter monetary policy started to bite.
Oil remains steady
Oil prices hovered around their four month high after a surprisingly large drop in US inventory levels sustained investor confidence in the market.
“Optimism on the OPEC deal and surprising storage declines pushed oil prices to the upper end of the recent trading range. Both trends are temporary and unlikely to mark the easing of the oil supply glut,” said Norbert Ruecker, head of commodity research at Swiss bank Julius Baer.
US data released on Wednesday showed a stockpile decrease of 3 million barrels last week, taking the total to 499.74 million barrels. This went against the general expectation for an increase. However, inventories remain at near record highs and a rally in the markets may be hard to sustain.
Oil markets rose again last week after Saudi Arabia and Iran agreed to negotiate an OPEC-led curb on oil output.
06/10/2016