Reuters, TOKYO, June 29 – On Tuesday, the dollar held below a two-month high against major equivalents, with traders mainly staying away ahead of a heavily watched U.S. jobs report, which could influence the timing of the Federal Reserve’s stimulus withdrawal. The dollar index, which measures the value of the dollar against a basket of six major currencies, was at 91.884 early in the Asian session, down from a high of 92.408 on June 18, the day after the Federal Open Market Committee surprised markets by predicting two interest rate hikes by the end of 2023. Since then, the Fed has emphasized the importance of data in determining when asset purchases should be tapered and interest rates raised, with Chair Jerome Powell saying recently that policymakers will not act solely on the basis of “fear” of inflation, but will encourage a “broad and inclusive” job market recovery. find out more According to a Reuters poll of analysts, the US Labor Department is projected to report a creation of 690,000 jobs in June, up from 559,000 in May, and an unemployment rate of 5.7 percent, down from 5.8 percent the previous month. Investors will also be watching Tuesday’s consumer confidence data as well as Thursday’s manufacturing index from the Institute for Supply Management for signs on where interest rates are heading. The dollar bought 110.620 yen, down from last week’s nearly 13-month high of 111.110. As the more contagious Delta form of the new coronavirus spread across Asia and worldwide, fanning worries of more lockdowns, both the dollar and the yen gained from some safe-haven buying. The euro was trading at $1.19210, heading closer to the two-and-a-half-month low of $1.8470 set on June 18. “The market had been long of the single currency on optimism regarding the vaccine catch-up trade in the region (but) forecasts that the Delta variant of COVID could spread across Europe (in) the summer months could now be undermining confidence in this trade,” Rabobank strategist Jane Foley wrote in a report, lowering a one-month euro forecast to $1.19 from $1.20. “Assuming that US data remains broadly positive throughout the year, we estimate the USD to grind marginally higher against the EUR.” Sterling, meanwhile, retreated to a two-month low, falling 0.1 percent to $1.38645. After slipping 0.3 percent at the start of the week on concerns about further COVID-19 lockdowns around the country, the Australian dollar was essentially flat at $0.75615, a liquid barometer for risk appetite. The kiwi dollar remained stable at $0.70430 ahead of Reserve Bank of New Zealand Governor Adrian Orr’s address. After rebounding from its lowest level since November, the euro fell 0.4 percent on Monday, breaking a five-day gaining streak. In a client note, CBA analyst Kim Mundy said, “We expect the RBNZ to start tightening monetary policy more than a year before the FOMC, which is a tailwind for the NZD.” “Under our coverage, the RBNZ is the most hawkish central bank.” ======================================================== At 1:00 a.m. GMT, currency bid prices were set. Each and every location Locations in Tokyo, Europe Volatilities Tokyo BOJ provides market data on the forex market. Kevin Buckland contributed reporting.
Shri Navaratnam edited the piece.
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