(MENAFN– ecpulse)
The U.S. dollar booked a place near its highest in four-and-a-half years against major currencies on Friday, with its next direction hinging on the upcoming U.S. jobs data.
U.S. economic data have been strong recently, and in particular data on the labor market.
Unemployment could go down further, which would strengthen expectations the Federal Reserve will raise interest rates as soon as next year, which would add to the dollar’s rally.
The Dollar Index hit a high of 88.174 today, a level not seen since June 2010.
The Dollar Index last traded at 88.04, slightly changed from late Thursday. The dollar has gained nearly 12% from its May low as the Federal Reserve ended its bond-buying program.
The dollar hit will go above its 2010 high of 88.708 on Friday if the jobs report signals a strong recovery in labor conditions.
Analysts expect nonfarm payrolls increased 235,000 in October.
One of the most important boosters for interest rate speculations, and would give a strong boost to the U.S. dollar is if today’s report showed better wage growth.
Against the yen, the U.S. dollar was trading just below the seven-year high of 115.52 yen hit yesterday. The yen was placed under pressure from the Central Bank of Japan’s decision to expand its easing program last week.
The euro weakened below $1.24, around its lowest in two years, after the European Central Bank on Thursday affirmed a pledge to take the steps necessary to help the economy of the Eurozone, with many indications pointing at a quantitative easing program.
The euro last traded at 1.23932, after having hit a low of 1.23669, the lowest since August 22, 2012.
If the numbers came out strong, the U.S. dollar would notably add to those gains, as it would affirm the divergence in economies between the U.S. and others, and it would greatly boost the Fed’s footing into policy normalization.
The Fed’s latest policy meeting showed members ignoring global weakness and focusing on the U.S. and its labor market.
However, if a disappointing number comes, the U.S. dollar might lose some steam, but it would be temporary.
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