By Tom Westbrook
SINGAPORE (Reuters) – The dollar looked set to extend its longest weekly winning streak in more than a year on Friday, supported by rising bond yields and expectations of another strong U.S. jobs report.
The dollar gained 0.5% against the yen this week at 158.03 yen and added more than 1% on the weakened British pound, which fell to a 14-month low combined with a selloff in gold coins and concerns about British finances.
The greenback is set for a generally steady week against the euro, which is buying at $1.0926 and saw small gains against the Australian and New Zealand dollars. [AUD/]
It is forecast for a sixth straight weekly gain, its longest streak since an 11-week streak in 2023, as the US economy continues to appear strong in contrast to weakness elsewhere.
The index was flat in Asian morning on Friday with a weekly gain of 0.25% to 109.18.
“We doubt the dollar needs to give back much of its recent gains,” said Chris Turner, global head of markets at ING, noting the shake-up in long sterling positions and risks to the greenback from upcoming US jobs data later in the day.
“Despite the risk of profit-taking, (the dollar index) found good support below 108 earlier this week.”
Sterling was last a fraction lower at $1.2295, after touching a 14-month low of $1.2239 earlier in the week. The Australian and New Zealand dollars are near multi-year lows, and – last at $0.6190 – came within touching distance of breaking the 2022 low of $0.6170.
The New Zealand dollar is also testing its 2022 low of $0.5512 and was last seen at $0.5594.
PAYROLLS
US non-farm payrolls data is expected to show that 150,000 jobs were added in December, with unemployment at 4.2%.
A hint of something much stronger would add to the case for smaller Federal Reserve rate cuts and could trigger another round of selling in jittery bond markets.
Philadelphia Fed President Patrick Harker said overnight that he expected the US central bank to cut interest rates, but added that an imminent cut was not necessary.
Markets have already cut expectations of about a 40 basis point cut in US interest rates by 2025, while concerns about President-elect Donald Trump’s potentially inflationary agenda have helped lift long-term yields.
Ten-year bond yields rose nearly 9 basis points this week to 4.68% and are up 96 bps since mid-September. [US/]
Ten-year bond yields rose 22 bps this week to 4.805%. [GB/]
Unusually, the crash in the bond market appears to have been felt by cryptocurrencies, with bitcoin down 5.7% against the dollar for the week to $92,600.
“I’m not sure how many people in the crypto scene would be aware of … the dynamics taking shape in US rates/treasuries, and many will be questioning the factors behind the movement in crypto,” said Pepperstone’s head of research, Chris Weston.
