Investing.com – The US dollar rose on Thursday, benefiting from strong employment data as well as uncertainty caused by unrest in the Middle East.
At 04:30 EDT (08:30 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, rose 0.2% to 101.597, not far from its recent three-week high.
Strong labor market data supports the dollar
The dollar received a boost from Wednesday’s report that showed a larger-than-expected increase in US jobs of 143,000 last month.
This followed a stronger-than-expected reading on Tuesday in the US, raising expectations for a healthy reading on Friday, which could lead to an adjustment in the market’s view on the likely pace of Fed easing.
“The Fed’s end-of-year funds pricing still largely includes a 50 basis point cut in November or December, which means room for further realignment to less dovish rhetoric from the Fed and thus upside risks for the dollar,” analysts at ING said. . note.
“We feel the barrier to a negative dollar reaction to US data today and tomorrow may be higher after Fed Chair Jerome Powell’s recent opposition to 50 basis point cuts.”
The market currently sees about a 37% chance of US interest rates being cut by another 50 basis points on November 7, according to CME Group’s (NASDAQ:) FedWatch tool, following the Fed’s big cut last month.
The US currency, which is considered a safe haven, also witnessed demand with the escalation of tensions in the Middle East after the Iranian missile attack on Israel.
The euro is weakening due to slowing inflation
In Europe, trading fell 0.1% to 1.1035, with the single currency falling near three-week lows after further signs of slowing inflation in the euro zone.
Euro zone activity data came in slightly stronger than expected in September, according to data released earlier on Thursday, but data for the region remained in contraction territory.
The European Central Bank’s normally hawkish policymaker abandoned her long-standing warning about the difficulty of taming price growth in a speech on Wednesday, raising expectations of another interest rate cut later this month.
GBP/USD fell 1% to 1.3133, falling to a two-week low after the Bank of England governor said in an interview that the central bank could become “a bit more aggressive” on interest rate cuts if there are more. It’s good news about inflation.
The yen falls to its lowest level in six weeks
The pair rose 0.1% to 146.53, with the pair rising to a six-week high after Japan’s new prime minister said on Wednesday, after a meeting with the central bank governor, expressed caution about the need for additional interest rate hikes.
The Bank of Japan’s July meeting, released earlier this week, also showed that policymakers are divided on how quickly the central bank should raise interest rates further.
It was largely unchanged at 7.0185, with Chinese markets now closed until Tuesday next week as the country celebrates Golden Week.