US Dollar Hovers Near A One-Week High

London: 5 December 2023 (TraderMade): The US dollar regained considerable ground on Tuesday. It hovered near a one-week high against a basket of currencies, ahead of a flurry of employment data that could upend investor expectations for the outlook for interest rates.

The Euro took an early knock from comments by European Central Bank member Isabel Schnabel, who said in an interview with Reuters that interest rate hikes were off the table, given the "remarkable" fall in inflation. Similarly, the dollar index was up 0.1%, around one-week highs.

Market participants keenly await Friday's US non-farm payrolls report for November. But before then, the monthly JOLTS report - which captures monthly hirings and firings - lands later on Tuesday, and the private-sector ADP survey is due on Wednesday.

Both could shape expectations for Friday's number and make for volatile trading in the run-up, given the power of monetary policy expectations to drive currencies.

"The main focus now is on central banks' monetary policy shift next year. We've had this dramatic dovish repricing of rate expectations for the Fed and the ECB last week, so that's certainly impacting FX markets," MUFG currency strategist Lee Hardman said.