Home Business Marketmind: The Dollar's Next Test Is the US Jobs Report

Marketmind: The Dollar’s Next Test Is the US Jobs Report

Due to lower yields, the dollar is headed lower against the yen over the weekend.

A look at the coming days in the European and global markets from Tom Westbrook:

After closing out its worst month since 2010, the dollar’s bull run may be coming to an end.

Federal Reserve Chairman Jerome Powell flagged the sell-off this week, surprising traders by not bouncing back against the downturn in markets’ financials over the past few weeks.

Since the Fed hiked 75 basis points in November, 10-year Treasury yields have fallen more than 50 basis points and mortgage rates have followed—a good portion of the tightening has been erased.

As yields eased, the dollar is headed lower for the week on the yen and is eyeing smaller losses on the euro and most other currencies.

The next test is Friday morning’s US jobs report, where a negative surprise could drag the dollar further down. Economists expect about 200,000 jobs were added last month.

Any more than that, and it could put the brakes on the bond rally and the dollar’s slide.

Markets in Asia were driven ahead of the figure, clinging to optimism about China’s reopening – except in Japan where gains in the yen provided an excuse for profit-taking in stockmarkets and the Nikkei dropped 1.7%.

Stock buying, a jump in local rates and a fall in the dollar have also finally given a bid to the Hong Kong dollar, which has bounced from the weak end to the middle of its trading band.

Limits on withdrawals from the $69 billion unlisted Blackstone Trust following a large redemption signaled losses and stress in global portfolios. People familiar with the matter said most of the redemptions came from Asian investors who needed cash.

Key developments that may affect the markets on Friday:

Economics: Germany October Trade Data, Euro Zone October Producer Prices, US November Non-Farm Payrolls

Speakers: Fed’s Barkin & Evans, ECB’s de Guindos

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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