Dollar edges higher before U.S. jobs report

On Friday, the dollar edged higher amid a generally calmer tone in markets, as concerns about the impact of omicron faded. Still, currency moves muted ahead of a critical U.S. payrolls report that could clear the way for earlier Federal Reserve interest rate hikes.

The three omicron cases found in the United States all had mild symptoms.

San Francisco Fed President Mary Daly suggested that it may be time to craft a plan to raise interest rates to combat inflation. At the same time, Richmond Fed President Thomas Barkin backed “normalizing policy”. Overnight, Omicron headlines were “net positive,” helping risk sentiment recover. However, with the first assessments of the efficacy of current vaccines likely still a week or so away, Expect ongoing volatility.

Currencies

The dollar index had a sharp drop on Tuesday. However, it rose 0.03 percent to 96.117 for the third day in a row. However, the index fell 0.70 percent last Friday, the most since May.

In congressional testimony on Wednesday, Powell stated that he and other policymakers would consider swifter action at their December 14-15 meeting.

Economists believe the United States created 550,000 new jobs last month, continuing a string of positive data.

The money market expects the Fed to raise the target rate by a quarter-point at its June meeting. The dollar fell 0.9% to 113.10 yen on Friday, following a 0.4 percent gain the previous day.

The euro remained unchanged at $1.13025, having dropped to a nearly 17-month low of $1.1186 last week. The risk-sensitive Australian dollar fell 0.12% to $0.7084, its fourth consecutive loss.

The European Central Bank and the Reserve Bank of Australia have remained dovish. This defied market expectations that policymakers will force to yield inflationary pressures.