Dollar rises on hopes of easing Covid restrictions in China, US employment data awaits

The euro and the pound sterling recouped some of their losses on Friday, but were still heading for their biggest weekly decline since September, ahead of US employment data that could confirm Federal Reserve Chairman Jerome Powell’s hint this week of continued monetary tightening, sending the dollar higher.

Improved investor sentiment after reports that China may ease its strict anti-Covid measures helped the euro and sterling regain some gains and also contributed to a sharp rise in the Chinese yuan.

The euro was last up 0.24 percent at 0.9772 against the dollar, after rising about 0.54 percent earlier in the session. The pound also rose 0.6 percent to 1.1228 against the dollar, after also trimming the gains it made in the Asian session.

However, the single European currency is headed for a decline of 1.9 percent during the week, as the sterling recorded a decline of 3.4 percent, its lowest decline since the third week of September.

The dollar rose broadly this week after Powell said on Wednesday that the US central bank may continue to raise interest rates if inflation does not slow, prompting markets to consider the possibilities of another US interest rate hike.

US employment data, due later on Friday, will provide the latest indication of the health of the US economy. Economists polled by Reuters had forecast an increase of 200,000 jobs last month, compared to an increase of 263,000 jobs in September.

Friday’s rally in currency, commodity and stock markets came on the heels of media speculation that China might loosen its anti-Covid-19 restrictions that are hampering economic activity.

On Friday, a Chinese foreign ministry spokesman said he was not aware of these media reports.

The offshore Chinese yuan rose more than 1 percent in the Asian session to a one-week high of 7.2441 against the dollar and was last at 7.2689.