Dollar touches highest level in more than 4 months amid Fed speculation

·3 min read
FILE PHOTO: Illustration photo of a U.S. five dollar note

By Caroline Valetkevitch

NEW YORK (Reuters) - The U.S. dollar touched a its highest level in more than four months against the euro on Tuesday, as investors speculated further over whether recent strong jobs data could be enough to push the Federal Reserve to soon start tapering its bond-buying program.

The U.S. dollar index, which measures the greenback against a basket of currencies, was up for a third straight session, at its highest level in about three weeks.

In cryptocurrencies, bitcoin was down 2% at $45,352.58, having hit a three-month high of $46,759 overnight. Ether was down 1.29% at $3,126.01.

The dollar has risen recently with U.S. bond yields as the prospect of reduced Fed stimulus weakened bond prices.

"The dollar is well bid and it's been well bid since the middle of last week," said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

"A combination of hawkish comments from several Federal Reserve officials and the second monthly increase of more than 900,000 jobs has reaffirmed what the market has suspected, and that is for a tapering decision to be made shortly."

U.S. job openings hit a record high in June while hiring also increased, the Labor Department said in a monthly survey on Monday.

On Friday, the department's non-farm payrolls report showed jobs increased by 943,000 in July, above the 870,000 forecast by economists in a Reuters poll.

Atlanta Federal Reserve Bank President Raphael Bostic said on Monday the U.S. economy is improving faster than expected, with the time when the Fed could start slowing its bond purchases nearing quickly.

Investors are looking for signals from the Federal Reserve at the annual Jackson Hole conference of central bankers this month.

U.S. consumer price data is due on Wednesday.

The dollar index was last up about 0.1% on the day, while the euro was down 0.1% at $1.1720.

Against the Japanese yen, the dollar rose 0.2% to 110.505 yen.

The dollar was also up 0.2% versus the Swiss franc, extending recent gains.

Investors continue to be worried about growth in China and the fast-spreading Delta variant of the coronavirus.

Germany's ZEW survey found investor sentiment deteriorated for a third month in a row in August, due to fears that rising COVID-19 infections could hold back the recovery in Europe's largest economy.

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Currency bid prices at 11:04AM (1504 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index

93.0480 92.9790 +0.09% 3.408% +93.1390 +92.9360

Euro/Dollar

$1.1720 $1.1736 -0.13% -4.07% +$1.1743 +$1.1710

Dollar/Yen

110.5250 110.3400 +0.17% +6.97% +110.5900 +110.2850

Euro/Yen

129.53 129.48 +0.04% +2.06% +129.6800 +129.4200

Dollar/Swiss

0.9224 0.9207 +0.21% +4.28% +0.9234 +0.9196

Sterling/Dollar

$1.3845 $1.3846 +0.00% +1.34% +$1.3872 +$1.3834

Dollar/Canadian

1.2532 1.2579 -0.36% -1.58% +1.2588 +1.2521

Aussie/Dollar

$0.7344 $0.7329 +0.18% -4.56% +$0.7356 +$0.7316

Euro/Swiss

1.0809 1.0802 +0.06% +0.02% +1.0818 +1.0795

Euro/Sterling

0.8464 0.8474 -0.12% -5.29% +0.8480 +0.8451

NZ

Dollar/Dollar $0.7002 $0.6991 +0.18% -2.48% +$0.7011 +$0.6969

Dollar/Norway

8.9270 8.9390 -0.21% +3.88% +8.9535 +8.9200

Euro/Norway

10.4644 10.5010 -0.35% -0.02% +10.5240 +10.4530

Dollar/Sweden

8.7137 8.7118 -0.06% +6.31% +8.7241 +8.6973

Euro/Sweden

10.2141 10.2205 -0.06% +1.37% +10.2242 +10.2060

(Additional reporting by Elizabeth Howcroft in London; Editing by Ramakrishnan M. and Subhranshu Sahu)