SINGAPORE- The dollar was near a two-week high against a basket of currencies on Wednesday as investors assessed US economic data that showed a cooling labor market, while wagering the Federal Reserve will cut rates next year.
The dollar index which measures the US currency against six rivals, was 0.019 percent higher at 103.99, having climbed 0.3 percent overnight. The index is up 0.5 percent this month, after sliding 3 percent in November, its steepest monthly decline in a year.
Data on Tuesday showed US job openings fell to more than a 2-1/2-year low in October, the strongest sign yet that higher interest rates were dampening demand for workers. Data also showed there were 1.34 vacancies for every unemployed person in October, the lowest since August 2021.
The focus will now shift to the Friday release of the November jobs report to provide clues on the strength of the economy ahead of the Fed’s policy meeting next week.
“This week the highlight is payrolls (report),” OCBC currency strategist Christopher Wong said, adding that a downside surprise could see dollar rebound stall.
Fed officials are now in a blackout period ahead of the US central bank’s Dec. 12-13 meeting, where a key focus will be the updated projections of where they see rates at in 2024.
Traders have priced in 99.7 percent chance of the Fed standing pat next week but a 56 percent chance of the central bank cutting rates in March, according to CME’s FedWatch tool.
ANZ analysts forecast conditions for the Fed to start cutting interest rates will emerge around the middle of 2024 but cautioned Chair Jerome Powell will need to maintain hawkish guidance during the transition to lower growth and inflation.
