Title: Dollar edges higher ahead of payrolls, resumes climb versus yen

Apr 01, 2022 01:55AM ET

By: AnalysisWatch

Ahead of a key US jobs report that could help the Federal Reserve decide whether to order a rate hike of up to 50 basis points next month, the dollar continued to rally against major currencies on Friday and also extended its rise against the yen.

The US currency also received support from its status as an excellent safe haven as peace talks between Russia and Ukraine stalled, although they are expected to resume later on Friday.

The dollar index, which measures the greenback against six counterparts including the euro and yen, rose 0.15 percent to 98.465 after gaining 0.50 percent on Thursday.

It had fallen to a four-week low of 97.681 at midweek amid a month-long consolidation that followed a breathless surge to a more than nine-month high at 99.415.

The Federal Open Market Committee (FOMC) will decide on further monetary policy on May 5. The CME Group tool indicates a 71% probability of a half-point rate hike after the Fed began its tightening cycle on March 16 with a quarter-point increase.

Economists expect the Labor Department report on Friday to show that nearly half a million new jobs were created in the US last month, with the unemployment rate falling and wage growth accelerating.

The dollar index "has been underwhelming of late, but showed some backbone overnight (and) upside potential remains within reach given the ongoing waves of violent Fed missteps and an aggressive front-loading profile that envisions rate hikes of nearly 100 basis points over the next two FOMC meetings," Westpac strategists wrote in a note to clients.

They predicted a break above 100 for the dollar index "in the coming weeks".

The second of the two FOMC meetings will be held on June 14 and 15.

The dollar increased 0.75 percent to 122.585 yen, its first gain in four days, as the currency pair tracked changes in long-term US government bond yields.