Dollar set for first winning week in three with Fed in focus

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TOKYO — The dollar headed for its first

winning week in three on Friday after rebounding from a

payrolls-induced sell-off, as investors continued to ponder the

timing of a tapering of Federal Reserve stimulus.

The dollar index, which gauges the greenback against

six major peers, was little changed on the day at 92.541,

remaining on course for a 0.49% weekly rise.

Last Friday, it sank to the lowest since Aug. 3 after data

showed the U.S. economy created the fewest jobs for seven

months, reducing the odds of an imminent reduction of the Fed’s

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asset-purchase program.

Since then, a number of officials have come out to suggest a

taper is still likely this year though, including Fed Governor

Michelle Bowman, who said overnight that the weak August labor

report won’t throw the central bank off course.

Data on Thursday showed that the number of Americans filing

new claims for jobless benefits fell last week to the lowest

level in nearly 18 months, offering more evidence that job

growth was being hindered by labor shortages rather than cooling

demand for workers.

“The Fed looks set to taper later this year, underscored by

recent comments this week,” Mark McCormick, global head of FX

strategy at TD Securities, wrote in a research note.

However, even with the trend toward monetary policy becoming

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less accomodative globally, financial conditions remain

ultra-loose, which “binds how much room the USD has to run and

favors selling rallies,” McCormick said.

The euro was flat at $1.18235 on Friday, on track

for a 0.47% decline this week.

The single currency got some small measure of support

overnight, after the European Central Bank said it would trim

emergency bond purchases over the coming quarter, as widely

expected.

In the past two quarters, the bank has bought around 80

billion euros worth of debt each month. It provided no numerical

guidance for the three months ahead, but analysts had predicted

before the meeting that purchases would fall to between 60

billion and 70 billion euros in those months.

“It was a big event for economists, not so much for

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traders,” Chris Weston, head of research at broker Pepperstone

in Melbourne, wrote in a note to clients. “The volatility was

not there.”

Euro support at $1.18 “needs to give way for shorts to get

any real traction here,” he said.

The dollar was little changed both on the day and for the

week at 109.71 yen, still meandering in the middle of

its range of the past two months.

The Aussie dollar slipped 0.07% to $0.7363, heading

for a 1.16% slide this week.

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Currency bid prices at 0123 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar $1.1821 $1.1825 -0.03% -3.25% +1.1829 +1.1820

Dollar/Yen 109.7150 109.7150 +0.02% +6.24% +109.8000 +109.7000

Euro/Yen

Dollar/Swiss 0.9167 0.9168 +0.01% +3.64% +0.9168 +0.9163

Sterling/Dollar 1.3834 1.3835 -0.01% +1.26% +1.3846 +1.3834

Dollar/Canadian 1.2671 1.2665 +0.05% -0.49% +1.2672 +1.2657

Aussie/Dollar 0.7361 0.7368 -0.10% -4.31% +0.7377 +0.7361

NZ 0.7093 0.7108 -0.20% -1.22% +0.7116 +0.7092

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(Reporting by Kevin Buckland; Editing by Ana Nicolaci da Costa)

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