Second Wind for Dollar Before Jobs Undercuts Bonds

(Bloomberg) -- The dollar rebounded as Treasuries fell before U.S. data expected to show sustained growth in hiring. Global stocks headed for the best start to the year since 2013.

As the greenback stabilized Friday after a two-day tumble, the yen, euro and British pound all weakened and the Turkish lira extended losses. China’s offshore yuan pared a record weekly rally triggered by government curbs while a second intervention by Mexico’s central bank sent the peso to the top of the stack among major currencies. Oil declined and Treasuries snapped their biggest post-Brexit rally.

Evidence of a healthy U.S. labor market could deliver a second wind to a flagging dollar hit by doubts that Donald Trump will usher in an era of fiscal easing and rapid growth. The employment report is expected to confirm a sixth straight year with more than 2 million jobs added, which may help to stem the steepest losses on a Bloomberg gauge of 10 major currencies this week. Market positioning in options signals the dollar is poised for further gains against the euro.

Read more from our Markets Live blog here.

Currencies

• The Bloomberg Dollar Spot Index rose 0.1 percent after falling 1 percent Thursday.
• The offshore yuan fell 0.6 percent to 6.8266 per dollar after a four-day climb.
• The euro was little changed at $1.06 and the pound was down 0.3 percent at $1.238.
• Turkey’s lira was down 0.5 percent at 3.6126 near a record low 3.6226.

Stocks

• Global stocks are poised to post the best start to a year since 2013, with the MSCI All-Country World Index up 1.7 percent this week.
• The Stoxx Europe 600 Index fell 0.3 percent at 9:55 a.m. in London, trimming a weekly advance, as commodity producers declined. S&P 500 futures were little changed
• Sanofi slipped 2.5 percent after Amgen Inc. won a court ruling blocking the French drugmaker and its partner from selling a cholestrol-lowering medicine in the U.S.

Commodities

• The Bloomberg Commodity Index, which measures returns on raw materials, fell 0.4 percent as metals declined on a stronger dollar.
• Gold retreated 0.2 percent to $1,177.93 per ounce after a three-day, 2.9 percent climb.
• Crude erased earlier losses to trade little changed after U.S. stockpiles declined more than forecast and Saudi Arabia joined other OPEC members in cutting production to stabilize the market.
• Futures for immediate delivery were up 0.1 percent at $53.83 a barrel in New York after earlier losing as much as 0.6 percent. U.S. crude inventories fell by 7.05 million barrels last week, a government report showed.

Bonds

• The biggest rally in U.S. Treasuries since June 27 was brought up short, with the yield on the 10-year benchmark up one basis point to 2.354 percent after sliding nine basis points Thursday.

--With assistance from Jeremy Herron Adam Haigh Natasha Doff Anooja Debnath Eddie van der Walt V. Ramakrishnan and Namitha Jagadeesh To contact the reporters on this story: Garfield Reynolds in Sydney at greynolds1@bloomberg.net, Cecile Gutscher in London at cgutscher@bloomberg.net. To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, Cecile Gutscher