The dollar extended this week's advance on Friday after strong data indicated a robust U.S. recovery underway and a tight labor market a day before investors will parse the non-farm payrolls report for hints about the pace of Fed taper discussions, the first step in normalizing post-pandemic monetary policy.
The Reuters consensus forecast predicts 700,000 new jobs were added in June, the middle of a 376,000 to 1.050 million range among 85 respondents.
The Fed is not expected to move as a result of Friday’s data, given Chair Jerome Powell's persistent view that inflation is likely to rise in the near-term but then fall back near the U.S. central bank's 2% target in 2022.
But the jobs report may bring forward the Fed’s outlook on rate hikes, now seen in early 2023, in line with the futures markets, which foresee fed funds increases beginning in Q4 2022.
Below-forecast U.S. jobless claims were accompanied by a report showing falling layoffs.
That was followed by a slight undershoot in ISM manufacturing, but still strong growth, and a surging prices paid component nL2N2OC2G7.
EUR/USD was ending U.S. trade near its lows -- after a short-lived, mid-session recovery -- as EUR longs unwind positions safeguarding against a payrolls number near the top of the poll range.
USD/JPY put in a new 2021 high at 111.63. New BoJ member Nakagawa notedthat the bank is mindful of downside risks on economy.
Diverging U.S.-Japan rate views support further gains in USD/JPY with near-term targets of 111.72, the March 2020 high and 112.40, the April 2019 peak.
GBP/USD fell 0.52% after Governor Andrew Bailey tempered hawkish BoE taper and rate tones, following a global central bank playbook that sees near-term inflation rises as temporary.
Comments from PM Boris Johnson on further precautions ahead of the end of UK lockdowns also weighed on the pound.
Commodity currencies CAD, AUD and MXN shrugged off rises in oil and copper, focused more on rate divergence with the U.S.
Cryptos fell with BTC dropping 3% and ether losing 5.37%, with traders wary of adding to risk ahead of payrolls on Friday.
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