Dollar Slides against Trading Partners, Fed Assets Holdings Rise
The US dollar declined modestly against its major trading partners early Friday ahead of an expected 450,000 increase in December US nonfarm payrolls, as markets appear to have already priced in a solid gain for the month.
The monthly US employment report, scheduled for release on Friday, is expected to also show a further dip in the unemployment rate and a 0.4% gain in hourly earnings.
Analysts have suggested the December report will not be as severely affected by the omicron variant as January’s data is expected to be as the spike in cases occurred too late in the month to be captured by the survey.
A quick summary of foreign exchange action heading into Friday shows that EUR-USD ticked up to 1.1304 from 1.1297 at the Thursday US close but was modestly below the 1.1314 level a day ago.
EU consumer prices unexpectedly rose in December while November EU retail sales were stronger than expected, according to reports released earlier Friday, but Eurozone economic sentiment declined more than expected in December due to rising cases of the omicron variant.
The European Central Bank does not meet again until Feb. 3, with plenty of December data released before then to study the effects of the new variant.
GBP-USD rose further to 1.355 from 1.3536 at the Thursday US close and 1.3537 a day ago. UK housing prices climbed further in December and hit a record high for 2021 according to data from mortgage lender Halifax released earlier Friday.
The Bank of England meets next on Feb. 3 and is likely to consider further monetary policy tightening assuming omicron cases have diminished.
USD-CAD declined slightly to 1.2720 from 1.2725 at the Thursday US close and sits below the 1.2724 level a day ago, losing more ground from the post-Federal Open Market Committee minutes boost the pair saw Wednesday.
As with the US, the highlight of this week’s Canadian data schedule is the employment report for December scheduled to be released at 8:30 am Friday at the same time as the US report. The Canada IVEY purchasing managers’ survey will be released at 10:00 am ET Friday.
USD-JPY slipped to 115.7788 from 115.8469 at the Thursday US close and 115.8033 a day earlier. While losing some ground from the Wednesday peak of 116.3189, the pair is up sharply from 115.1099 a week ago and is the best performing of the dollar pairs.
Japanese housing spending and income data for November released overnight were weaker-than-expected, and that was before the omicron variant emerged.
Federal Reserve Holdings of US Securities Rise Slightly for Week of Jan. The Federal Reserve’s holdings of US securities rose by $9.07 billion to $8.279 trillion in the week through Jan. 5, Fed data showed.
The Fed’s holdings of US Treasury securities accounted for much of the gain, rising by $9.01 billion to $5.661 trillion, while holdings of US mortgage-backed securities rose by only $68 million to $2.616 trillion.
Total Federal Reserve assets increased by $8.26 billion to $8.766 trillion. # Dollar Slides against Trading Partners, Fed Assets Holdings Rise
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