Read for 5 minutes (Reuters) – SINGAPORE (Reuters) – On Wednesday, the dollar was poised for its largest monthly gain since March, bolstered by traders’ apprehension ahead of erratic US labor data and concerns that the development of the Delta coronavirus type could postpone the pandemic’s recovery. FILE PHOTO: A Korea Exchange Bank employee counts one hundred US dollar bills during a photo opportunity on April 28, 2010 at the bank’s headquarters in Seoul. Jo Yong-Hak/File Photo/REUTERS This month, the dollar has gained approximately 2.5 percent against a basket of currencies, largely as a result of the Federal Reserve’s unexpectedly hawkish rate stance. If labor data this week provides signs as to the pressure on policymakers, traders believe it might move substantially in either direction. After the Australian and New Zealand dollars fell approximately 0.7 percent versus the dollar on Tuesday, and the Canadian dollar fell nearly 0.5 percent, risk-sensitive and commodity-exposed currencies suffered the most losses on Wednesday. They were firm in Asia, as were the safe-haven currencies of the Japanese yen and Swiss franc, which held their ground on Tuesday. The euro was trading at $1.1900, the yen at 110.49 per dollar, and the Australian dollar was trading at $0.7518, all close to recent lows against the dollar. Currency markets appeared to be transitioning from carefully watching the ebb and flow of risk sentiment to a higher sensitivity to interest rates, according to Paul Mackel, global head of FX research at HSBC, creating a shakeout that has strengthened the dollar. During an outlook call, Mackel told reporters, “There’s been a lot of speculative build-up of short dollar positions over the previous couple of months, and we think that these are being washed out.” Last week, statistics indicated the largest drop in the value of bets against the dollar in three months, boosting the greenback as shorts bought dollars to close positions. After touching a one-week high of 92.194 on Tuesday, the US dollar index, which measures the greenback against a basket of six major currencies, was stable at 92.041. Through June, it had increased by 2.5 percent. With this week’s release of US labor data, the near-term forecast for the dollar will be put to the test. Signs of strength might increase inflationary pressure on policymakers, causing them to move faster on rate hikes, while a miss could add some wiggle room to the timeframe. Private payrolls are due later on Wednesday, but the primary focus will be on Friday’s more comprehensive labor numbers. “For the big dollar overall, a lot depends on how payrolls play out this week,” Mackel said. “If that meets expectations, Asian currencies should be able to breathe a sigh of relief.” Private payrolls are expected to increase by 600,000 in June, according to economists polled by Reuters, down from 987,000 a month ago. The average expectation for Friday’s non-farm payrolls is for a gain of 690,000 jobs, but there is a wide range of estimates, ranging from 400,000 to over a million. “It’s unusually difficult to forecast, so the possibility of a surprise is high,” said Sean Callow, a Westpac analyst. “Extremely strong could amplify the reaction to the (Fed), while extremely weak could retaliate against those who bought dollars.” A new rise in global coronavirus infections, as well as restricted attempts to prevent them, kept currency swings in check. As the contagious delta strain spreads, case numbers are breaking daily records in Indonesia, lockdowns are being extended in Malaysia and expanded in Australia, and tourists from the United Kingdom are facing new restrictions. The pound gained 0.1 percent to $1.3849. ======================================================== At 556 GMT, currency bid prices were as follows: RIC RIC RIC RIC RIC RIC YTD Pct High Bid Low Bid Last U.S. Pct Change CloseChangePreviousSession $1.1898 Euro/Dollar Dollar/Yen exchange rate: $1.1896 +0.02 -2.62 +1.1909 +1.1894 percent percent % percent Euro/Yen 110.4600 110.5400 -0.05 +6.96 +110.5900 +110.4600 Dollar/Swiss 131.43 131.49 -0.05 +3.55 +131.6500 +131.4300 percent percent 0.9218 0.9212 +0.07 +4.19 +0.9218 +0.9208 percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent Sterling/Dollar 1.3840 +0.06 +1.36 +1.3860 +1.3839 percent percent Dollar/Canadian 1.3847 1.3840 +0.06 +1.36 +1.3860 +1.3839 percent percent 1.2392 1.2404 -0.11 -2.70 +1.2403 +1.2368 percent percent Aussie/Dollar 1.2392 1.2404 -0.11 -2.70 +1.2403 +1.2368 percent percent Aussie/Dollar 0.7518 0.7513 +0.09 -2.24 +0.7527 +0.7510 percent percent NZDollar/Dollar NZDollar/Dollar NZDollar/Dollar NZDollar/Dollar NZDollar/Dollar NZ 0.6997 0.6994 +0.06 -2.55 +0.7004 +0.6989 percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent percent Each and every location Locations in Tokyo, Europe Volatilities Tokyo BOJ forex market data; Tom Westbrook reporting; Shri Navaratnam and Kenneth Maxwell editing Continue reading