FOREX-US dollar rises for 3rd day ahead of Fed's Powell comments

BY Reuters | ECONOMIC | 12/01/23 10:40 AM EST

      U.S. manufacturing sector remains in contraction territory

      Focus on Fed's Powell's speech

      U.S. rate futures price in 56% chance of March rate cut

 (Adds new comment, bullets, byline, NEW YORK dateline, FX table; updates prices)
    By Iain Withers and Gertrude Chavez-Dreyfuss
       LONDON/NEW YORK, Dec 1 (Reuters) - The dollar rose for a third straight day on Friday, while the
euro extended steep overnight losses, as traders looked ahead to a speech later in the day by U.S. Federal
Reserve Chair Jerome Powell.
    The greenback, however, pared gains after data showed the U.S. manufacturing sector remained weak in
        The Institute for Supply Management (ISM) said its manufacturing PMI was unchanged at 46.7 last
month. It was the
    13th consecutive month
     that the PMI stayed below 50, which indicates contraction in manufacturing.

        Post-manufacturing data, U.S. rate futures on Friday priced in a 56% chance of a rate cut by the
March meeting next year, compared to 43% late on Thursday, according to the CME's FedWatch tool. For the May
meeting, U.S. rate cut chances surged to 84%, from about 76% the day before.

    Softer inflation data in both the United States and the euro zone on Thursday reinforced expectations
that both central banks might be done raising interest rates in their battle against price rises and led
traders to bet on earlier cuts next year.
    Goldman Sachs on Friday said it now expected the European Central Bank to deliver its first rate cut in
the second quarter of 2024, compared to an earlier forecast of a cut in the third quarter of next year.
    Investors will have their sights trained on a talk due to be given by the Fed's Powell later on Friday
for any clues about the future path of interest rates in the U.S.
    "That would be the Fed's last opportunity to set the record straight for the meeting before the blackout
period," said Erik Bregar, director, FX & precious metals risk management, at Silver Gold Bull in Toronto.
"So I think you're just seeing a paring back of post-CPI (consumer price index) decline in the dollar."
    Currency movements were more muted on Friday, after month-end trades on Thursday contributed to bigger
swings, analysts said.
    The U.S. dollar index - which tracks the currency against six major counterparts - was last up 0.2% at
103.69, after clocking its weakest monthly performance in a year in November.
    Mixed economic data across Europe failed to set the tone for the euro, with a survey showing a downturn
in euro zone manufacturing activity eased slightly last month but remained deeply in the red. Britain also
reported contraction in manufacturing, but an improved reading for a third straight month.
    The euro was last down 0.4% at $1.0842, while sterling was flat at $1.2617.
    Against the yen, the dollar slipped 0.1% to 148.09 yen. The yen was on course for its third
straight week of gains, pulling it away from the near 33-year low of 151.92 per dollar touched in the middle
of November.
    Rising expectations of the Bank of Japan abandoning its ultra-easy monetary policy next year along with
a drop in U.S. yields have buoyed the Asian currency in the past few weeks.
    In cryptocurrencies, bitcoin continued to strengthen, rising to a fresh 18-month high of
$38,839. It was last up 1.9% at $38,401.

    Currency bid prices at 10:24AM (1524 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change
 Dollar index                 103.5200       103.4500    +0.09%         0.029%        +103.7200   +103.2600
 Euro/Dollar                  $1.0853        $1.0889     -0.32%         +1.29%        +$1.0912    +$1.0842
 Dollar/Yen                   147.3750       148.2100    -0.53%         +12.44%       +148.3400   +147.3500
 Euro/Yen                     159.94         161.35      -0.87%         +14.00%       +161.7700   +159.9500
 Dollar/Swiss                 0.8734         0.8753      -0.23%         -5.55%        +0.8768     +0.8731
 Sterling/Dollar              $1.2639        $1.2627     +0.12%         +4.54%        +$1.2675    +$1.2615
 Dollar/Canadian              1.3504         1.3559      -0.41%         -0.34%        +1.3564     +1.3496
 Aussie/Dollar                $0.6639        $0.6605     +0.57%         -2.56%        +$0.6643    +$0.6600
 Euro/Swiss                   0.9478         0.9526      -0.50%         -4.21%        +0.9545     +0.9479
 Euro/Sterling                0.8585         0.8624      -0.45%         -2.93%        +0.8634     +0.8586
 NZ                           $0.6177        $0.6155     +0.39%         -2.69%        +$0.6192    +$0.6152
 Dollar/Norway                10.7140        10.8270     -0.90%         +9.33%        +10.8050    +10.7300
 Euro/Norway                  11.6309        11.7648     -1.14%         +10.84%       +11.7760    +11.6258
 Dollar/Sweden                10.4538        10.4994     -0.62%         +0.44%        +10.5200    +10.4297
 Euro/Sweden                  11.3463        11.4168     -0.62%         +1.76%        +11.4359    +11.3442


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