NEW YORK- The dollar index rose on Friday, with the greenback set to lock in a fourth straight week of gains after data this week kept interest rate expectations for the Federal Reserve in check while investors looked towards next week’s key payrolls report.
The Commerce Department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, jumped 0.5 percent last month after an unrevised 0.3 percent gain in August and above the 0.1 percent rise estimated by economists polled by Reuters.
A separate report by the University of Michigan showed October consumer sentiment rose to 70.5 from 70.1, topping the 69.0 estimate, while the one-year inflation outlook fell to 2.7 percent from the preliminary reading of 2.9 percent but in line with September’s final result.
The dollar was poised for its fourth straight week of gains, as a run of positive economic data has quieted expectations about the size and speed of the Fed’s rate cuts, which has also lifted US Treasury yields.
Investors are now focusing on the October government payrolls report next week, which is likely to be impacted by a strike at Boeing and two hurricanes that hit the US Southeast.
“We had a massive recalibration in economic expectations for the US and that process seems to have largely run its course, the Fed’s policy trajectory looks much more reasonable and interest rate differentials between the US and other major economies are stabilizing here,” said Karl Schamotta, chief market strategist at Corpay in Toronto.
“Clearly payrolls data is the key variable, and it is still an open question as to whether September’s number was an outsized move or an aberration, a statistical aberration and so, next week’s report will help to clarify that, but the reality is that we also are going to be taking it with a huge grain of salt.”
