"U.S. data is going to keep driving the direction of the dollar. Yesterday's numbers have boosted the view that tapering could happen in December."
- Gus Faucher, senior economist at PNC Financial Services Group Inc
The U.S. Dollar advanced to the strongest level versus the Yen in more than half a year as investors are making their bets on whether the recent signs of economic pickup will be enough for the Fed to cut the pace of the monthly bond-buying programme. Higher construction spending and stronger manufacturing output are all speaking in favour of December's tapering.
The markets, however, are keeping an eye on Friday's report from the Bureau of Labor Statistics that will publish November jobs data. The main reason to pay attention to the release is that it could play a decisive role in Bernanke's decision, as he considers unemployment rate and economy's ability to create jobs as key indicators of economic health. At the same time, Joe LaVorgna, Chief U.S. Economist at Deutsche Bank, expressed his view that non-farm payroll increases for the last month will be stronger-than-expected, and the level will be enough for the central bank to begin tapering already in December. According to his projections, non-farm payrolls will increase by 185,000 a month, level slightly less than the year-to-date average gain, which stood around 190,000. Moreover, he thinks October's 204,000 figure will be upwardly revised, pointing at solid gains in the labour market.
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