Dollar hits week-high on U.S. jobs report


Dollar hits week-high on euro and yen up to payrolls rates.

Kiwis head for the weekly jump as rate hikes draw near.

LONDON, Aug 6 - The dollar moved higher on Friday, driven by a rise in U.S. inflation-adjusted bond yields to one-week highs and expectation of a strong set of employment data that could make the case for faster U.S. policy tightening

The Federal Reserve Vice Chair Richard Clarida laid the groundwork for significant dollar gains by suggesting that conditions for hike of interest rates could be satisfied as soon as late 2022 this week.

Clarida's remarks lifted the real yields after five weeks of declines while Treasury yields, including inflation, will snap a six-week swing of declines.

U.S. non-farm payroll data is due at 1230 GMT. Forecasts for jobs created last month vary widely from 350,000 to 1.6 million, and the consensus estimate is 870,000.

A number that size or larger could lift the dollar further, especially against the euro and the yen, which will not see any policy tightening for years more.

Steve Englander, chief of FX research at Standard Chartered, said that even a number near the current consensus can provoke a market reaction.

A major piece of data that can be read as an optimistic signal could firm up rate expectations, said he, particularly as the markets have recently backed away from pricing in hikes.

By 0830 GMT, the dollar traded against a basket of currencies, having eked out a 0.3% gain so far this week after last week's 0.9% fall which has been its worst since May.

The EUR, on top of the euro, stood at $1.1812, with the latter also pressured by weaker-than-expected German industrial orders data. The greenback also touched a one week high of 109.88 Japanese yen.

Expectations grew on Thursday for a strong set of U.S. jobs numbers after initial claims for state unemployment benefits fell by 14,000 to 385,000 in the week ended July 31, and layoffs were lowest in more than 21 years.

Anka and Vasilieos Gkionakis, global strategy director for the Lombard Odier Group, said that the impact of Clarida's hawkish comments was unlikely to last long-term.

On the whole, I think we are in the phase of the business cycle where growth and global trade will continue fairly solid, and that's going to provide some downside bias for the Dollar, he said.

That view was echoed by a Reuters poll of strategists, with most predicting a dollar fall next year.

Elsewhere, the US dollar is on course for its best week since late June following a sharp drop in unemployment that all but cemented expectations of an interest rate this month.

The kiwi last bought $0.7048 and the Australian dollar found $0.7387, slightly lower on the day, selling $0.7348 and $7048 at walmart.

On Thursday, a path of rate hikes was also mapped out by the Bank of England to support sterling, which last bought $1.3920.

However, the firm currency, along with rising COVID infections in Asia, is hitting emerging currencies, with the Thai baht at a three-year low. It has lost more than 7% in seven weeks. Meanwhile, the Turkish lira fell 0.7% to two-week lows.