Bet on US interest rates peaking! The dollar is expected to end the week lower. The 20-year U.S. Treasury yield fell below 5.0%. Provided by Investing.com

Investing.com – In European morning trading on Friday (3rd), the U.S. dollar weakened, extending its earlier losses. Traders prepared for the end of the Fed’s interest rate hike cycle, but before the important non-farm payrolls data was released, Dollar volatility is limited.

As of 17:35 Beijing time (05:35 a.m. Eastern Time), the U.S. dollar index futures, which measures the U.S. dollar against six trade-weighted major currencies, fell 0.08% to 105.897; the U.S. dollar index fell 0.04% to 106.08, down so far this week 0.5%, the dollar’s third decline in the past 16 weeks.

Benchmark U.S. Treasury yields: The U.S. 10-year Treasury bond yield was at 4.668%, and the U.S. 20-year Treasury bond yield was at 5.000%, having fallen to 4.990% earlier.

(Daily chart of U.S. dollar index, source: Investing.com)

h2 The US dollar may fall on a weekly basis, pay attention to the non-farm payrolls report/h2

This week, the Federal Reserve kept interest rates steady and sent some dovish signals on whether it will raise interest rates further in the future.Although the Fed still leaves the door open to raising interest rates,butDollarstilllost a lot of popularity,on the contraryBets are growing that the Fed will end raising interest rates this yearand will start cutting interest rates in mid-2024.

Analysts at ING said in a report: “Although the Fed maintains a tightening bias, it seems that investors are more interested in interpreting it as a pause in raising interest rates and trading accordingly. A pause in raising interest rates will lead to Interest rate volatility has declined and rekindled demand for high-yielding foreign exchange through carry trades.”

The focus now turns tolaterpublished10Key non-farm payroll data for the month.Any sign that the labor market remains strong could increase the likelihood of further interest rate hikes by the Federal Reserve and could support the dollar in recovering some of this week’s losses.

Analysts expect the U.S. economy to add 180,000 jobs in October, down from 336,000 in September. However, the unemployment rate is expected to remain unchanged at 3.8%, while average hourly earnings are expected to increase 0.3% in October after rising 0.2% in September.

h2 Bank of England maintains hawkish stance/h2

GBP/USD fell 0.02% to 1.2199, after rising about 0.4% the previous day, and is expected to gain 0.7% this week. The Bank of England also announced on Thursday (2nd) that it would keep interest rates stable, but emphasized that since the inflation rate is still more than three times higher than the medium-term target of 2%, it will not start cutting interest rates in the short term.

During the day, investors will also need to pay attention to the speech of Huw Pill, chief economist of the Bank of England.

h2 Analyst: There is more room for the euro to rise/h2

EUR/USD rose 0.14% to 1.0635, and is expected to achieve a 0.6% increase this week. Currently, the hot topic in market discussion is how long the European Central Bank will keep interest rates high amid the weak European economy.

Isabel Schnabel, a member of the European Central Bank’s Executive Committee, said on Thursday (2nd) that the “last mile” to curb inflation may be the most difficult, and the European Central Bank cannot rule out the possibility of further interest rate increases.

ING said, “Eurozone data this week are unfavorable for the euro (economic growth and confidence are weak, inflation is low), but the stabilizing dollar environment suggests that the EUR/USD exchange rate may climb again.”

h2 The Australian dollar is expected to rise 1.7% this week/h2

The Japanese yen exchange rate continues to fluctuate near the 150 mark. USD/JPY fell 0.03% to 150.39.

The U.S. dollar was flat against the onshore renminbi, at 7.3161; the U.S. dollar against the offshore renminbi fell 0.05%, at 7.3248. China’s 10-year government bond yield was at 2.677%.

Data earlier today showed that the Caixin China General Service Industry Business Activity Index (Service PMI) released on November 3 recorded 50.4 in October, an increase of 0.2 percentage points from September.

Breakdown data show that after the expansion slowed down significantly in September, the increase in supply and demand in the service industry remained limited in October. The business activity index for that month was slightly higher than the year’s low in September, and the new orders index fell to the lowest for the year, both of which were only slightly above the boom-bust line. Some companies reported that demand was weaker than expected and sales were suppressed.

The Australian dollar rose 0.07% to 0.6439 against the US dollar, rising 1.7% so far this week, as the market bets that the Reserve Bank of Australia will raise interest rates at next week’s meeting.

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Compiler: Liu Chuan