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Focus on Fed meeting, with rate cut all but priced in
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Investor confidence brittle after earthquake strikes Japan
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Aussie dollar gains as RBA rules out easing
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Cryptocurrencies rally: bitcoin, ether up
(Recasts, adds new comment, FX table, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, Dec 9 (Reuters) -
The U.S. dollar advanced on Tuesday as better-than-expected
job-market figures underscored a still resilient labor market
ahead of the Federal Reserve's anticipated rate cut, with
policymakers likely to emphasize inflation risks that could
constrain further easing moves.
Markets are also bracing for several more central bank decisions
before the weekend. On Tuesday, the Reserve Bank of Australia
kept rates on hold ruled and ruled out more rate declines,
pushing the Aussie dollar higher.
The greenback, on the other hand, extended gains after data
showed U.S. job openings increased modestly in October, while
hiring remained subdued. Job openings, a measure of labor
demand, were up 12,000 to 7.670 million by the last day of
October, according to the Job Openings and Labor Turnover
Survey, or JOLTS report, on Tuesday.
Economists polled by Reuters had forecast 7.150 million
unfilled jobs.
The dollar rose after the report, climbing to two-week highs
versus the yen near 157 yen and was last up 0.6% at to 156.845 n
. It also gained against the euro, which slipped 0.1%
to $1.1629.
With the data out of the way, the market has turned its
focus once again to the Fed.
Investors are dialing back expectations of rate cuts in 2026 as
skepticism mounts that Kevin Hassett, the frontrunner to succeed
Jerome Powell, whose eight-year term as Fed chair ends in May,
will prove as dovish as hoped by U.S. President Donald Trump.
"There's a lot of uncertainty about what we're going to get
tomorrow. Rate cuts are pretty much nailed on at this point,"
said Shaun Osborne, chief FX strategist, at Scotiabank in
Toronto.
"But beyond that, there's a lot of moving parts to what the
Fed can do tomorrow. I think there seems to be an expectation
that Powell is going to try and set the bar relatively high for
another cut, but I'm not sure that's really going to give the
dollar that much."
The U.S. dollar index, which measures the
greenback's strength against a basket of six currencies, edged
up 0.1% at 99.21.
US OUTLOOK IN 2026
With markets seeing that Fed policy easing this week is a
near-certainty, attention is also turning to the outlook for the
year ahead.
"Everyone will be looking at the dot plot," said Commerzbank
FX analyst Michael Pfister. "We are seeing decision-makers with
diverging views now," he said, adding that if the dot plots are
lower than the last time, this will probably not be helpful for
the dollar.
The "dots" from the September meeting, when the Fed resumed
its easing cycle with a 25 basis-point cut, showed a policy rate
of 3.6% by the end of 2025, 3.4% at the end of 2026, and 3.1% by
the conclusion of 2027.
"A hawkish repricing is rolling across curves elsewhere - rate
hikes are getting priced in for Australia, Canada, and the euro
area in 2026 - so the dollar could come under pressure if Powell
fails to out-hawk markets," said Karl Schamotta, chief market
strategist, at Corpay in Toronto.
Elsewhere, the euro slipped following Monday's selloff in bund
markets, after European Central Banks board member Isabel
Schnabel told Bloomberg News the bank's next move may be an
interest rate hike rather than a cut as some expect, but added
that it would not happen in the near future.
AUSSIE DOLLAR GETS LIFT; QUAKE SHAKES YEN
The Australian dollar advanced 0.3% to US$0.6641 after
the central bank held rates for a third consecutive month at
3.6% as widely expected, and warned that a pickup in inflation
could be persistent.
It accelerated gains as RBA Governor Michele Bullock said in
a press conference that more rate cuts were not needed.
The yen earlier in Asia firmed after a powerful
7.5-magnitude earthquake struck Japan's northeast overnight.
That added to the risk-averse mood ahead of the Fed meeting and
expected policy decisions from several other central banks,
while an auction of five-year government bonds attracted robust
demand.
The Chinese yuan trading offshore in Hong Kong drifted
0.1% higher against the greenback to at 7.0617 per dollar, as
markets deemed the statement from the latest Politburo meeting
released on Monday indicated that policymakers showed little
urgency to roll out additional stimulus measures.
In other currencies, the British pound was slightly
down at $1.3303, while the New Zealand dollar was
modestly up at US$0.5781.
In cryptocurrencies, bitcoin rose 2.6% to $93.704.38,
while ether rose 6.4% to $3,350.32.
Currency
bid
prices
at 9
December
? 08:21
p.m. GMT
Descript RIC Last U.S. Pct YTD High Low
ion Close Chang Pct Bid Bid
Previous e
Session
Dollar 953
Euro/Dol 5
Dollar/Y .80
5
Euro/Yen Dollar/S Sterling % 5 328
9?
Dollar/C % 825
Aussie/D 5 661
Euro/Swi Euro/Ste NZ 5 769
ollar
Dollar/N ? % 2 102
7
Euro/Nor Dollar/S % % 356
Euro/Swe
Print
