Euro set for longest losing streak in its history, US payrolls loom
THE euro was heading on Friday (Oct 6) for a record twelfth week of declines against the US dollar, unless US jobs data later in the day push the currently all-dominant greenback lower.
The European common currency was last up a fraction on the day at US$1.0575, moving off Tuesday’s 10-month low of US$1.0448 but still set for a further small weekly decline making that streak the longest since its launch in 1999.
The euro/US dollar moves have largely been US dollar-driven, and the US dollar index, which tracks the unit against six main peers, albeit with the greatest weight given to the euro, is heading for a 12th straight week of gains.
The last time it clocked such a milestone was in 2014.
The US dollar’s recent strength has been underpinned by a rapid sell-off in US government bonds, which sent yields to multi-year highs.
That was driven by a combination of selling by some asset managers who had held overweight positions in government bonds, rising oil prices, a deluge of supply of government and corporate bonds, and investors finally accepting that central banks will keep rates high for a long time, particularly in the US where economic data has been strong.
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Other currencies were able to catch a break in the middle of this week when bond prices steadied, but US non farm payrolls data could change that.
“The pause in the bond sell-off is granting some room for recovery for most currencies against the US dollar. Today’s US payrolls are, however, the big event of the week and a strong read could easily put markets back on a bearish track and reignite aggressive US dollar buying,” said Francesco Pesole, FX strategist at ING.
The pound, which hit a six-month low earlier in the week before rebounding, was up 0.16 per cent at US$1.2211.
The Japanese yen remained under pressure with the US dollar up 0.36 per cent against the yen at 149.04.
US dollar/yen’s sharp sudden Tuesday dip to 147.30 stoked speculation that Japanese authorities could have intervened in the currency market to shore up the battered yen, though data from the Bank of Japan (BOJ) seemed to suggest otherwise.
“Whether the BOJ and/or (Ministry of Finance) will intervene at distinct levels ... will continue to be a tease, contingent on broader currency markets and momentum,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank.
Elsewhere, the Swiss franc was steady on the day at 0.9119 per US dollar and the Australian dollar was down 0.2 per cent at US$0.6359, but set for a 1.2 per cent weekly decline. REUTERS
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