Dollar wavers as traders turn to payrolls

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SYDNEY — The dollar wobbled in a choppy

Asia session on Thursday, as investors looked ahead to U.S.

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labor and inflation data where softness may signal an eventual

slowdown in U.S. rate hikes.

After surging on Wednesday, the greenback struggled to hold

the gains and fell 0.4% to $0.9922 per euro and 0.3%

against sterling.

The risk-sensitive Australian and New Zealand dollars gained

more than 0.5% to lift the Aussie over $0.65 and the kiwi to a

two week high above $0.58.

U.S. jobs data is due on Friday and inflation figures next

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week. Federal Reserve officials have repeatedly stressed they

will hike and hold rates high until inflation subsides, and

markets expect a steep 75 basis point hike next month.

However, an unexpectedly modest 25 basis point hike in

Australia this week raised hopes other central banks may temper

their tightening soon too.

“People are kind of anticipating the Fed could do

likewise, but obviously the Fed is pushing back against this

idea,” said Bank of Singapore analyst Moh Siong Sim.

“It’s a bit of a positioning adjustment rather than a big

reassessment of the fundamentals,” he said. “It really depends

on the data (and) any hint that things might slow down in the

U.S. – the market will latch on to that.”

No such data nor hints from the Fed were in evidence on

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Wednesday, when the dollar lifted sharply.

The U.S. services industry posted another month of expansion

in September, while labor market figures were solid and the

trade deficit narrowed.

San Francisco Fed President Mary Daly reiterated

policymakers’ focus on inflation fighting and dismissed market

hopes for rate cuts in 2023.

“I think that just reminded people that you might be a bit

premature in trying to price in rate cuts in the U.S.,” said

Westpac currency strategist Imre Speizer.

Interest rate futures imply more than 130 basis

points of tightening ahead for the Fed before the middle of next

year.

The U.S. dollar index wobbled 0.08% lower to 110.84,

off lows near 110 from earlier in the week, though some distance

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below last week’s 20-year high of 114.78.

Sterling last bought $1.1351, while the Australian

dollar was up 0.6% to $0.6528. The New Zealand dollar

, riding an additional boost from a resolutely hawkish

central bank hike on Wednesday, made a two-week peak of $0.5810.

The yen, which has been held steady by the risk of

further Japanese intervention, sat at 144.51 per dollar.

The Saudi Arabia-led cartel of oil producers agreed to steep

production cuts on Wednesday, lifting Brent crude futures

to a three-week high of $93.99 a barrel.

Analysts said higher prices would probably reduce the

chances of rate cuts any time soon and hit hardest for Europe

and Britain.

“Higher energy prices would have a much more direct impact

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on the European region given the more direct relationship to

their finances,” said NatWest Markets’ strategist Jan Nevruzi.

Later on Thursday the European Central Bank releases minutes

from last month’s policy meeting.

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Currency bid prices at 0600 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar

$0.9920 $0.9886 +0.37% -12.72% +0.9927 +0.9881

Dollar/Yen

144.4900 144.5450 +0.02% +25.70% +144.6900 +144.4150

Euro/Yen 143.35 143.00 +0.24% +10.00% +143.4600 +142.8500

Dollar/Swiss

0.9805 0.9830 -0.25% +7.49% +0.9830 +0.9800

Sterling/Dollar

1.1349 1.1319 +0.32% -16.04% +1.1383 +1.1302

Dollar/Canadian

1.3579 1.3617 -0.28% +7.39% +1.3620 +1.3565

Aussie/Dollar

0.6526 0.6491 +0.58% -10.19% +0.6541 +0.6488

NZ

Dollar/Dollar 0.5790 0.5746 +0.81% -15.38% +0.5813 +0.5740

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(Reporting by Tom Westbrook.

Editing by Shri Navaratnam and Lincoln Feast)