©Reuters
Dollar unable to capitalize on wave of jobs data, but rebounding ahead of Fed hikes
Written by Yassin Ibrahim
Investing.com – The dollar has exhausted attempts to capitalize on Friday’s strong November jobs report, but bears are unlikely to pressure the greenback for much longer as the Federal Reserve prepares for more rate hikes. interest, albeit at a slower pace.
The greenback, which measures the greenback against a basket of six major heavy currencies, fell 0.04% to 104.65, down from a session high of $105.56.
“We think the dollar’s recent decline is exaggerated and is unlikely to get much traction from here,” Wells Fargo said in a statement earlier this week.
He added that further interest rate hikes would support demand for the greenback even at a slower pace “as fundamental fundamentals and interest rate differentials continue to favor the greenback.”
Bets for more Fed rate hikes increased on Friday as the monthly jobs report showed an upside surprise in jobs and wage hikes, knowing the wages issue will be even more worrying for the Fed in its battle against inflation.
Earlier this week, Powell stressed the importance of reducing demand in the labor market, particularly in the services sector.
“Because wages are the largest cost in providing these services, the labor market holds the key to understanding inflation in this category,” Powell said in a speech Wednesday at the Brookings Institution event in Washington.
With the dollar down more than 7% since the start of November, others have suggested it is too soon to bid farewell to the dollar’s long bullish wave and question the market’s wager that Powell is unlikely to hold his own. higher interest rates for much longer.
Investors’ move to trigger Powell’s “trick” higher for a longer period is premature, ING said, and “may not be a sustainable move if the Fed raises interest rates in a more aggressive stance.” rapid decline In inflation he He added that the economic problems in Europe are working in favor of the dollar.
ING’s note also added, “By the way, the global macro picture remains challenging, especially in Europe (where cold weather could drive up gas prices) and China, which also points to the dollar’s resilience.”
