ROYAL COLUMBIA, USA, November 5 - The dollar was trading near one-year highs against major peers on Friday ahead of a U.S. jobs report and after a string of central banks this week pushed back against faster tightening of monetary policy.
The timing of Federal Reserve interest rate increases could be estimated later on Friday, and investors will be watching new U.S. labour market data later on Friday.
The dollar index, which measures the dollar against a basket of six rivals, has strengthened around 1% over the past fortnight. The gains in the day were consolidated, last up 0.2% at 94.527, reaching its one-year high of 94.561, closing in on last month's one-year high of 94.56.1.
The biggest global central banks knocked back bets for early rate hikes as investors forced to reset monetary policy expectations this week.
The Bank of England's decision on Thursday not to lift rock-bottom benchmark rates proved the biggest shock for markets and pushed sterling to its biggest one-day fall in more than 18 months by as much as 1.6% on the day.
The pound fell a further 0.6% on Friday, hitting a new one-month low of $1.34250. It was last down by 0.4%.
In the week, the Reserve Bank of Australia stuck to its dovish stance despite inflationary pressure and held rates. The Aussie is on track for around a 2% weekly fall and was last down by 0.4% on the day at $0.73665.
The European Central Bank President Christine Lagarde said on Wednesday that it was not likely that such a move would occur in 2022, and said that it was very unlikely that it would happen in 2022.
Analysts at MUFG said that the scaling back of rate increase expectations outside of the US helped lift the dollar index. The US dollar has been encouraged as well in recent days because of further evidence that activity in the US is picking up again. Fed Chair Jerome Powell said he was not in rush to increase borrowing costs, even though the Federal Open Market Committee announced a $15 billion monthly tapering of its $120 billion in monthly asset purchases.
The Fed has set a labour market recovery as a condition for a rates lift-off. Economists said that the U.S. non- farm payrolls will show a 450,000 surge in jobs in October, following a 194,000 rise in the prior month.
The FOMC delivered a ``dovish taper, but the USD is still better positioned than most, Westpac strategists wrote in a client note.
The euro slumped by 0.2% after falling 0,5% overnight, while the dollar was roughly flat against the yen at 113.855 yen.
The value of the coin was over $61,400, having had largely traded sideways since it hit its all-time high above $67,000 last month.