FOREX-Dollar holds above 2018 lows ahead of U.S. jobs report

  • 1/8/2021
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* Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E LONDON, Jan 8 (Reuters) - The dollar held above a 2018 low against other major currencies on Friday ahead of fresh U.S. jobs data likely to give clues on the extent of fiscal stimulus needed to prop up the coronavirus-hit economy. The greenback bounced off a nearly three-year low on Thursday as a rise in U.S. yields triggered some unwinding of bearish bets on the currency, with traders taking profits against the euro in particular. Democrats won effective control of the Senate this week, while chaos gripped Washington. Congressional Democrats on Friday weighed impeaching President Donald Trump for a second time after his false claims of election fraud helped encourage a mob that stormed the U.S. Capitol. The Democrats’ Senate seat wins give President-elect Joe Biden scope to push through more spending, which analysts predict will fuel risk appetite and be negative for bonds and the dollar. “I think once this euphoria dies down, the dollar is likely to resume its downtrend trend, because I don’t think the Fed will be so eager to taper,” said Marshall Gittler, head of investment research at BDSwiss, in a note. “I think the U.S. employment picture is likely to lag that of other countries and therefore the U.S. tightening cycle is likely to lag. That makes the picture for the dollar negative, in my view.” The dollar index dropped 7% in 2020 and as much as 0.9% in the first few days of the new year on expectations of U.S. fiscal stimulus. On Friday, the index was up a quarter of a percent at 90.047, after its biggest gain in more than two months on Thursday. It remains on track for a weekly decline. U.S. non-farm payrolls for December is due at 1330 GMT, with the median expectation in a Reuters poll for +71,000 jobs, down from +245,000 in November. Several major currencies weakened versus the dollar, with the euro down as much as 0.5% at $1.22130, while the Japanese yen touched a fresh three-week low of 104.090 yen . Bitcoin slid around 2% to around $39,000, after smashing through $40,000 for the first time on Thursday.

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