By Gregor Stuart Hunter
SINGAPORE (Reuters) -The dollar found its footing in Asia on Friday as sterling and the yen lost ground, while weaker-than-expected Chinese trade data cast a chill over the region’s markets.The dollar index, which measures the currency’s strength against a basket of six peers, appreciated 0.1% to 99.796. It has recovered some strength after mounting bets on a cut at the Fed’s next meeting erased the greenback’s month-to-date gains on Thursday, but the gauge remains lodged within the same trading range it has sat in since August.
“Markets are flying blind because we only have private sector data to rely on,” said Christopher Wong, currency strategist at OCBC in Singapore. “There’s a correlation breakdown to some extent,” he added. “There isn’t a clear big trend in the dollar, and that’s why in Asia currencies are taking cues from the broad market sentiment.”
With the U.S. government shutdown postponing the release of the monthly non-farm payrolls report, traders have turned to private sector data showing the economy shed jobs in October in the government and retail sectors. Cost-cutting and the adoption of artificial intelligence also led to a surge in layoffs.
Traders ramped up bets on a rate cut even as Chicago Federal Reserve President Austan Goolsbee said on Thursday the lack of official data on inflation during the government shutdown “accentuates” his caution about cutting interest rates further. “When it’s foggy, let’s just be a little careful and slow down,” he told CNBC.
Trading in Fed funds futures implies a 70% chance of a cut at the U.S. central bank’s next meeting on December 10, up from a 62% probability a day earlier, according to the CME Group’s FedWatch tool. Against the yen, the dollar strengthened 0.2% to 153.27 yen after data released on Friday showed Japanese household spending in September rose 1.8% from a year earlier, slightly worse than the median market forecast for a 2.5% rise. The Australian dollar was flat at $0.64785, while the kiwi slid 0.2% to $0.5620. Sterling softened 0.2% to $1.31195, the day after the Bank of England held interest rates steady on a 5-4 decision, with Governor Andrew Bailey casting the deciding vote. British finance minister Rachel Reeves has told the country’s budget watchdog that a rise in personal taxation is among the “major measures” she is preparing to announce in her budget, The Times reported on Thursday. The euro declined 0.1% to $1.1535, edging away from a one-week high.
(Reporting by Gregor Stuart Hunter; Editing by Sam Holmes)
