Dollar Hits Four-Month High On Euro As Markets Bet On Earlier Fed Taper

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The dollar climbed against major peers on Monday, reaching a four-month high versus the euro, as traders positioned for an earlier tapering of Federal Reserve stimulus.

The greenback strengthened as far as $1.1742 to the single currency , extending a 0.6% pop from Friday, when a strong U.S. jobs report stoked bets that a reduction in asset purchases could start this year and higher interest rates could follow as soon as 2022.

The dollar index , which tracks the U.S. currency against six rivals, rose to a two-week top 92.915.

The dollar also hit an almost two-week high of 110.37 yen .

“U.S. payrolls were a game-changer,” Chris Weston, head of research at brokerage Pepperstone in Melbourne, wrote in a client note.

The dollar index is eyeing a close above 93, while the currency could head for $1.1704 per euro, Weston wrote, adding that it could climb further versus the yen too should U.S. yields continue to tick higher.

The benchmark 10-year Treasury yield jumped 8 basis points on Friday to a two-week high of 1.3053%. There was no trading in Tokyo on Monday with Japan shut for a national holiday. Singapore markets were also closed.

Friday’s non-farm payroll report showed jobs increased by 943,000 in July compared with the 870,000 forecast by economists in a Reuters poll. Numbers for May and June were also revised up.

The Fed has made the labor market recovery a condition of tighter monetary policy, and most officials back the view that a jump in inflation will prove transitory, though there is debate over how prolonged it could be.

Traders will be keenly watching a U.S. consumer price report on Wednesday.

Last week, Fed Vice Chair Richard Clarida suggested that conditions for hiking interest rates might be met as soon as late 2022.

The dollar rallied against its Australian and New Zealand counterparts on Monday, jumping 0.3% to as high as $0.7330 per Aussie and up 0.4% to $0.6980 per kiwi .

Currency bid prices at 0017 GMT

Description
RIC
Last
U.S. Close Previous Session
Pct Change
YTD Pct Change
High Bid
Low Bid
Euro/Dollar
$1.1742
$1.1763
-0.17%
-3.89%
+1.1769
+1.1742
Dollar/Yen
110.2900
110.2100
+0.05%
+6.75%
+110.3050
+110.2600
Euro/Yen
129.50
129.65
-0.12%
+2.03%
+129.6700
+129.5100
Dollar/Swiss
0.9161
0.9152
+0.10%
+3.54%
+0.9162
+0.9153
Sterling/Dollar
1.3855
1.3875
-0.13%
+1.42%
+1.3874
+1.3857
Dollar/Canadian
1.2583
1.2552
+0.25%
-1.19%
+1.2583
+1.2558
Aussie/Dollar
0.7328
0.7355
-0.35%
-4.73%
+0.7357
+0.7329
NZ Dollar/Dollar
0.6985
0.7011
-0.34%
-2.70%
+0.7007
+0.6980

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

– Reuters

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