Forex – Dollar Inches Up Ahead of U.S. Job Data

The dollar inched up on Friday – The dollar inched up on Friday and remained near one-and-a-half-month highs ahead of the much anticipated U.S. job data due later in the day.

The gain in dollar followed a spike in Treasury yields on better-than-expected U.S. data and indications from the Federal Reserve that interest rates will continue to rise.

The U.S. , which tracks the greenback against a basket of other currencies, was at 95.50 by 01:30AM ET (05:30 GMT) after hitting an overnight high of 95.78, the most since August 20.

The yield on the benchmark  rose to levels not seen since 2011 after upbeat economic data and hawkish comments from Fed Chairman Jerome Powell bolstered expectations of an interest rate increase in December.

The yield was up 1.36% to 3.204% on Thursday after jumping almost 4% in the previous session.

Fed Chairman Jerome Powell said Wednesday that the U.S. central bank may raise interest rates above an estimated “neutral” setting as the U.S. economy continues to grow.

“Interest rates are still accommodative, but we’re gradually moving to a place where they’ll be neutral,” neither holding back nor spurring economic growth, Powell said.

“We may go past neutral. But we’re a long way from neutral at this point, probably,” he added.

Look ahead, the September employment report is expected to take center stage later in the day in the U.S.

A strong payrolls report, especially if wage growth appears to be in check, could further boosts treasuriy yields and impact equities, according to analysts.

The Labor Department will release the numbers at 08:30AM ET (12:30 GMT).

On average, economists expect that nonfarm payrolls rose by 185,000 last month, down from a rise of 201,000 in August. The jobless rate is expected to tick down to 3.8%.

Average hourly earnings are forecast to have risen 0.3% in September, a 2.8% gain year on year.

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