By Peter Nurse
Investing.com – The US dollar loses positions at the beginning of the trading day of this in Europe, although it remains at good levels in general pending the publication of the official monthly employment report of the United States this Friday, which could strengthen the case for an early rate hike from the Federal Reserve.
At 8:55 AM (CET), the, which tracks the currency against a basket of six other major currencies, is down 0.1% to 96.227, although it is on track to post big weekly gains.
Although the dollar fell slightly this Friday, expectations that the US central bank could raise interest rates fairly quickly this year, especially after the aggressive December Fed meeting, are boosting the greenback and performance. of US Treasury bonds.
“The FOMC could begin to raise official interest rates as early as the March meeting to be in a better position to control inflation,” said James Bullard, president of the Federal Reserve Bank of St. Louis, on Thursday. “Subsequent rate hikes during 2022 could be advanced or delayed depending on the evolution of inflation.”
Fed fund futures estimate that there is roughly an 80% chance of a 25 basis point hike by the Fed at its March meeting.
The pair rose 0.1% to 115.97, with the yen being the most prominent victim of the dollar’s rise, which hit a five-year high at 116.35 earlier this week as it is believed to be the Bank of Japan is a long way from raising interest rates.
The pair is aiming 0.1% higher to 1.1305, with another surprisingly weak data from German and French industrial production, limiting gains. The rises 0.1%, to 1.3540, while the, very sensitive to risk, advances 0.1%, to 0.7157.
The main focus of attention for the day will be the release of data for the United States, which will be released at 2:30 p.m. (CET), and which is expected to show an increase of 400,000 in December, almost doubling the disappointing increase of 210,000. November, and the unemployment rate falls from 4.2% to 4.1%.
However, Wednesday’s, which is often used as guidance for the government’s official report, showed that companies created 807,000 jobs last month, more than double what was expected. Other data, such as wage growth, will also be analyzed for its implications for inflation.
“For the dollar to retain its gains, the employment report will have to be so positive that it fuels expectations of an anticipated rate hike in the first quarter and / or four hikes this year,” said Kathy Lien, analyst at 60 Second Investor. “That would require job growth to exceed 650,000 jobs, the unemployment rate to continue to decline and growth in average hourly pay to accelerate.”