The dollar firmed to seven-week highs against the yen on Friday, as investors awaited U.S. jobs data ahead of next week’s Federal Reserve meeting, while weak inflation figures pushed the Norwegian crown to four-month lows against a stronger euro.
LONDON The dollar firmed to seven-week highs against the yen on Friday, as investors awaited U.S. jobs data ahead of next week’s Federal Reserve meeting, while weak inflation figures pushed the Norwegian crown to four-month lows against a stronger euro.
The single currency rose a third of a percent to a four-day high of $1.0619, having been boosted by comments from European Central Bank head Mario Draghi on Thursday that investors saw as somewhat hawkish.
The ECB removed from its statement a reference to using all available measures to induce growth and inflation, driving markets to price in an interest rate hike in early 2018, on expectations the ECB will wind down its stimulus programme as the European economy improves.
“It (the euro) is not going to run away to the top side because we’re waiting to see what wage growth does today in the States, and what the Fed statement tells us next Wednesday,” said ING currency strategist Chris Turner in London.
A surprisingly robust private U.S. jobs report from ADP on Thursday heightened bets for a strong monthly non-farm payrolls release due at 1330 GMT, further strengthening the case for a U.S. interest rate hike at the Fed’s policy meeting next week.
The dollar climbed almost half a percent to 115.495 yen, its highest since Jan. 20, leaving it up nearly 1-1/2 percent for the week.
The dollar index, which tracks the greenback against a basket of six major rivals, was flat at 101.85. It was on track for its fifth straight week of gains – its best run in eight months – after a quarter-of-a-percent rise this week.
Markets are now pricing in an almost 90 percent chance of a Fed hike next week, according to Reuters data.
“In the near term it’s going to be quite tough for there to be further dollar strength, given how well-priced the Fed meeting is next week, and also just how much the market has priced for the year now as a whole,” said currency strategist Hamish Pepper at Barclays in London.
The Norwegian crown fell to four-month lows against the euro after data showed consumer prices in Norway fell to four-year lows in February, putting pressure on the central bank to keep monetary policy loose.
It was last down 0.7 percent, at 9.1450 crowns per euro.
(Reporting by Ritvik Carvalho- Editing by Mark Potter)
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