Dollar jumps to three-week high ahead of U.S. jobs data

Tue Aug 30, 2016 3:04pm EDT
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By Karen Brettell

NEW YORK (Reuters) - The dollar rose to a three-week high against a basket of currencies, and a one-month high against the yen, on Tuesday as investors looked ahead to crucial jobs data this week for clues on when the Federal Reserve will next raise interest rates.

Hawkish comments on Friday by Fed Chair Janet Yellen and Vice Chair Stanley Fischer increased expectations the U.S. central bank could hike at its September policy meeting, though most investors and economists view a single increase at the December meeting as more likely.

The next key indicator is Friday's jobs report for August, which is expected to show employers added 180,000 jobs in the month, according to the median estimate of 89 economists polled by Reuters. [ECONUS]

"We had a bit more hawkish tone from Yellen at Jackson Hole and that was reinforced by Fischer,” said Mark McCormick, North American head of FX strategy at TD Securities in Toronto.

"The market is refocusing itself on the upcoming data releases and I think that's helping a rethink of where the Federal Reserve's is going to be in the second half of the year,” he said.

Friday's jobs data will be preceded on Wednesday by the ADP National Employment Report of private-sector payrolls.

Fischer, who said that the data could weigh on any rates decision, gave no fresh clues on timing in a television interview on Tuesday. He said the U.S. job market is nearly at full strength and the pace of Fed rate increases will depend on how well the economy is doing.

The dollar index, which measures the currency against a basket of six majors, rose as high as to 96.143 .DXY, its highest level since Aug. 9, before falling back to 96.062, up 0.50 percent on the day.   Continued...

U.S. dollar notes are seen at a Kasikornbank in Bangkok, Thailand, May 12, 2016. REUTERS/Athit Perawongmetha