Dollar rises to new one-month high ahead of US jobs data

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Dollar rises to new one-month high ahead of US jobs data

On Friday the dollar climbed to a new one-month high while investors braced for crucial US jobs data later in the day that should provide clues on how aggressive the Federal ReserveFederal Reserve will be in tightening policy.

The yen declined from a seven-month peak for a fourth day, even as the yield on the 10 year Japanese government bond reached the central bank's new policy ceiling of 0.5 percent, a level not seen since July 2015.

The broadest index of Asia-Pacific shares excluding Japan rose as much as 0.94 percent at one point to reach a 4 -- 1 2 month high.

The re-opening is likely to be a bumpy affair amid surging COVID- 19 cases and increasingly stretched health systems, but our economists expect growth momentum across Asia, led by China, HSBC strategists wrote in a note to clients.

There was a chance that there would be higher Chinese growth in crude oil. The price of crude oil was 94 cents, or 1.2 percent, higher at $79.63 a barrel, while the US West Texas Intermediate crude futures were up 91 cents, or 1.2 percent, at $74.58 a barrel.

Germany's DAX futures showed a 0.53 percent rise at the restart, while Britain's FTSE futures signaled a 0.2 percent advance.

The US stock futures went up 0.34 percent after the 1.16 percent overnight slide for the S&P 500.

Wall Street sold off because Wall Street was worried that a robust jobs market would keep the Fed raising rates for longer, after data released on Thursday showed a bigger than expected rise in private payrolls and a drop in jobless claims.

Tony Sycamore, market analyst at IG said that the labour market isn't showing signs of cooling, so there's a concern that the labour market is very much on edge.

But the important one is going to be tonight, and I don't think the bogey man is going to be in the cupboard with tonight's number. Non-farm payrolls are projected to show on Friday that 200,000 jobs were created in December, easing from November's 263,000 pace.

The US two-year Treasury yields spiked to a more than two-month high of 4.497 percent overnight, but fell to 4.4561 percent in Tokyo. The 10-year yield, which rose as high as 3.784 percent in New York, fell to 3.7122 percent.

The US currency went higher against major peers on Friday, mainly the Japanese yen.

The dollar index, measured against six counterparts, including the yen and euro, gained 0.8 percent to 105.20, and was earlier at 105.31 for the first time in a month.

The dollar index is up 1.64 percent this week, which is on course to snap a streak of three losing weeks. It is shaping up for the best performance since September.

The dollar rose by 0.46 percent to 134.03 yen and touched a new one-week high of 134.37. It is poised to gain 2.28 percent this week, its best showing since mid-October.

Japan's currency had rallied to the strongest level in seven months at 129.51 per dollar on Tuesday, capping its surge after the BOJ narrowened the band it allows for the 10 year JGB yield to 50 basis points either side of zero.

The benchmark 10 year yield reached 0.5 percent on Friday.

Naka Matsuzawa, market strategist at Nomura said the 10 year yield reached 0.5 percent is no surprise considering the market is expecting another policy change.

He said that the BOJ could widen the band from zero for the 10 year JGB yield to 75 bps in this year, although an exit of negative interest rate policy for the overnight call rate isn't likely to happen in 2023 because officials must acknowledge that the 2 percent inflation target has been reached.

The euro was not much changed at $1.0519, after earlier easing to $1.0511, a level last seen on December 12.