Dollar set for fourth weekly gain versus euro
UUP•The dollar was on track for a fourth straight weekly gain against the euro, while September U.S. job growth came in at 29,000 versus economists’ 90,000 forecast. Traders priced an 86% chance the Federal Reserve would hold rates steady later this month, up from 36% a week earlier.
1. Dollar gains despite jobs miss
The dollar was on track for a fourth straight weekly gain against the euro on Friday, supported by elevated U.S. Treasury yields, European government bond selling and expectations that the Federal Reserve would maintain its hawkish stance. It trimmed some gains after data showed the U.S. economy added 29,000 jobs in September, compared with economists’ expected 90,000, while unemployment edged up to 4.2%.
2. Fed rate expectations
Traders priced an 86% chance that the Fed would hold rates steady later this month, compared with 36% a week earlier. The dollar index was down 0.1% at 101.88 but remained on track for a third straight weekly gain; the euro was set for its fourth straight weekly loss against the dollar.
3. European bond pressure
Concerns about French finances and political turmoil weighed on European bonds. The premium of French 10-year yields over German yields rose above 150 basis points, its highest since late 2011. Higher oil prices also prompted some investors to reduce exposure to currencies of major energy importers, including the euro and yen.
