‘A number significantly above the 700,000 mark could really get the dollar freight train running’
The US dollar is up by 0.38% on Tuesday against the pound as investors await this week’s non-farm payroll report. At the time of writing, the dollar is valued at £0.723076.
“Dollar strength continues to weigh on the euro and sterling, giving a modest boost to indices this side of the pond, while in the US despite some weakness in the futures markets remain in strong form,” said Chris Beauchamp, chief market analyst at IG.
“Money continues to flow into the US dollar, as the greenback continues its recovery from the lows of last week. The rosier US outlook is driving a renewed appreciation of US assets, even if the Fed has managed to muddy the waters on policy thanks to the recent FOMC meeting and the speeches following it.”
According to economists polled by Reuters, the US Labor Department will report a gain of 690,000 jobs for June, which would be up from 559,000 in May. Unemployment is expect to fall by 0.1% to 5.7%.
“This rise in the greenback is taking its toll on commodity prices, with gold under renewed pressure while oil becomes increasingly nervous ahead of this week’s OPEC get-together,” Beauchamp added.
Since the Federal Reserve’s policy meeting earlier in June, the dollar has been moving up, as the Fed said that the first interest rate rise could come in 2023.
“The potential for an upside surprise (in the U.S. jobs data) that pulls monetary tapering and tightening expectations forward is looming ever bigger for investors,” Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto, told CNBC.
“A number significantly above the 700,000 mark could really get the dollar freight train running, and no one wants to be tied to the tracks if that happens.”