Dollar opens near high as investors focus on US jobs data

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Dollar opens near high as investors focus on US jobs data

The dollar opened near its highs for the year on Wednesday as investors focused on recent US jobs data and a likely rate hike in New Zealand. The Euro is near a 14 Month Low of $1.1563 it spent last week and caught $1.1599 after falling 0.2% overnight. The safe yen also fell overnight, dropping around 0.5% reflecting a positive mood in the equity markets. The Yen began the Asia session at around 111.50 per dollar. The greenback has received support from investors recently as they brace for the Federal ReserveFederal Reserve to begin to taper asset purchases this year and lay the groundwork for rate hikes before peers, while the euro has languished in the past. U.S. non-farm payroll data due on Friday is seen as crucial to informing the Fed's tone and timing, especially if figures wildly impress or disappoint Private payrolls figures, a sometimes inaccurate guide, are due around 1215 GMT. A large miss on market expectations for around 428,000 jobs to have been added in September could dampen expectation for Friday's broader figure, said Commonwealth Bank of Australia analyst Carol Kong. We maintain our view that a solid improvement in Friday's payrolls will prompt the Fed to announce a taper for November, she said. Elsewhere, commodity-linked currencies drew support from oil prices that have surged to three-year highs. The Canadian dollar sits near a two-month peak and is near the 200-day moving average. Against the euro, the Canadian dollar hit a 19-month high. The Australian currency was also held back but supported in China by worries about fragile growth in the US - a top market for Australian commodity exports. The Aussie was last stable at $0.7289 and the Kiwi was being tamed at $0.6960. The Reserve Bank of Auckland announces policy settings at 0100 GMT and is all but certain to deliver the rate hike it delayed in August amid a COVID - 19 outbreak in New Zealand. Swaps markets have priced a 97% chance of a 25 basis point hike and a roughly 90% chance of another one in November, but analysts said the currency would be sensitive to the central bank's tone. We expect a hike and so do markets. A pause would be a shock, says an analyst from ANZ Bank. Presuming they do hike, that will put extra carry on the table which should in theory be positive. But near-term enthusiasm can end up being dampened by the RBNZ tone, especially when they are dovish, as we expect. Overnight, Sterling suffered a little more of its sharp selloff against the dollar and recovered at $1.3628 in early Asia trade. It touched a three-week high of 85.00 rupees against a weaker euro overnight.