Dollar touches 4-week peak, sterling lower before expected BOE hike

London, Aug. 3 (BNA): The dollar scaled a four-week peak against major peers on Thursday after upbeat labour market data a day earlier, while sterling edged lower ahead of an expected rate hike from the Bank of England.

 

Data out on Wednesday showed U.S. private payrolls rose more than expected in July, while plans by the U.S. Treasury to increase the size of government bond auctions in the third quarter pushed longer-dated U.S. Treasury yields higher and boosted the dollar, Reuters reported.

 

“Data out of the U.S. continues to be stronger than expectations. The employment situation is still very good,” said Niels Christensen, chief analyst at Nordea.

“Rate differentials continue to move in favour of the dollar as U.S. rates have been firmer than European rates,” Christensen added.

 

The dollar index , which measures the currency against six major peers, rose as high as 102.84, the highest level in four weeks. It was last up 0.1% at 102.73, extending Wednesday’s 0.5% gain.

 

The closely watched U.S. nonfarm payrolls report is due on Friday.

 

A fresh wave of risk aversion after rating agency Fitch downgraded the U.S.

 

government’s top credit rating could have resulted in some safe-haven buying, others said, which paradoxically also lent support to the dollar.

 

Against a stronger dollar, sterling fell 0.1% to $1.27. On Wednesday it hit a four week low of $1.2680.

 

The Bank of England’s monetary policy announcement is due later on Thursday, when the central bank is expected to raise rates by 25 basis points to a 15-year high of 5.25%, the 14th consecutive hike of the current tightening cycle.

 

 

 

 

ZH