SINGAPORE- The dollar was pinned near recent lows against other currencies on Tuesday, as traders awaited US jobs data for a guide to the rates outlook, while labor market strength lifted the kiwi in anticipation of a New Zealand rate hike within weeks.
New Zealand’s jobless rate unexpectedly fell to 4 percent last quarter, its lowest since December 2019, and the New Zealand dollar jumped 0.5 percent to a one-month high of $0.7056.
“We’ve flown past full employment, and the economy is becoming quite overheated,” said analysts at ANZ, who expect 25 basis point hikes in August, October, November, February and May to carry kiwi rates from 0.25 percent currently to 1.5 percent by mid-2022.
Elsewhere currencies were broadly steady as markets looked ahead to partial US labor data due later on Wednesday and non-farm payroll figures due on Friday. The dollar was a touch lower at $1.1870 per euro and the dollar index, which measures the greenback against six major rivals, held at 92.024.
The dollar index has now slipped more than 1 percent from a 15-week peak it struck a fortnight ago as US yields and US rate hike expectations have receded with investors questioning the strength and speed of the economic recovery.
“The big dollar picture is that there is a pullback in Fed hike expectations and we’ve seen the US dollar head south,” said National Australia Bank senior strategist Rodrigo Catril, adding the focus was now on the rates implications of jobs data. – Reuters
