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- The dollar remained aloft in Asian trade on Monday, after soaring to nearly seven-month highs against a basket of currencies as robust U.S. employment data prompted more investors to bet on an interest rate increase by year this year. U.S. nonfarm payrolls rose 271,000 last month, far exceeding the 180,000 new jobs for October economists polled by Reuters had predicted. Following the report, 15 of 17 primary dealers, the banks that deal with the U.S. Federal Reserve directly, said they expect it to raise rates at its next meeting in December, according to a Reuters poll. Interest rates futures were pricing in a 70 percent probability that the U.S. central bank will raise borrowing costs next month, according to the CME Group’s Fed Watch. Even ahead of the robust jobs data, some investors had begun betting on a rate increase. Speculators bolstered bullish bets on the U.S. dollar in the week through Nov. 3, as net long-dollar positions climbed to their highest in more than two months, according to data from the Commodity Futures Trading Commission released on Friday.
- Asian stocks slipped and the dollar stood at a 7-month high against its peers early on Monday after robust U.S. jobs data bolstered expectations of a Federal Reserve interest rate hike in December. Prospects of the Fed hiking rates for the first time in almost a decade and ending seven years of easy monetary policy, which have pump-primed global markets with flush liquidity, weighed on riskier assets. In recent months financial markets have been buffeted by uncertainty over the timing of the Fed’s rate hike, with some traders worrying that higher borrowing costs in the United States could drag on a shaky global economy. However, the early fall in Asian stock prices were measured, probably reflecting trading on Wall Street, which bounced from a selloff to end little changed on Friday. Crude oil prices rebounded in Asia on Monday in response to last week’s sharp fall in the U.S. with disappointing Chinese trade data shrugged off for now. Sunday, China said the October trade surplus came in at $61.64 bn, a tad more than $60.34 billion in September, with exports down 6.9% as imports slumped 18.8%. October’s trade surplus came in at a new monthly record due to a steeper drop in imports rather than any improvement in exports. The strong trade surplus partially explained a surprise rise in China’s foreign exchange reserves announced on Saturday. China’s foreign-exchange reserves rose by $11.387 bn in October from September, suggesting the wave of capital outflows that’s spooked markets may be abating. Last week, oil prices fell to seven-day lows on Friday, as a broadly stronger U.S. dollar and ongoing concerns over a global supply glut weighed. Nymex oil futures held on to losses after industry research group Baker Hughes (N:N:BHI) said late Friday that the number of rigs drilling for oil in the U.S. decreased by 6 last week to 572, the tenth straight weekly decline and the lowest level since June 2010. Over the prior ten weeks, drillers in the U.S. have cut 103 rigs. A lower U.S. rig count is usually a bullish sign for oil as it signals potentially lower production in the future. The oil market has been volatile in recent months amid uncertainty about how quickly the global glut of crude is set to shrink. Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production. Despite the tighter outlook for North America, output remains robust in other countries. Saudi Arabia and other Gulf OPEC members have indicated they will continue to stick to their policy of defending market share by keeping production high.