FOREX-Safe-haven yen, Swiss franc rise on Omicron fears, Fed policy uncertainty

       * U.S. payrolls below expectations for November
    * Jobs report details trending in right direction, analysts say
    * Fed funds futures show 74% chance of tightening in May
    * U.S. Treasury calls out Vietnam, Taiwan in currency report
    * Graphic: World FX rates

 (Recasts, adds new comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Dec 3 (Reuters) - The safe-haven yen and Swiss franc gained on Friday as global equities and
bond yields fell on fears about the spread of the Omicron variant of COVID-19, which has resulted in renewed
restrictions in parts of the world, and concerns about possible aggressive action by the Federal Reserve to
curb surging inflation.
    "Volatility remains the norm in recent weeks amid changing outlooks on monetary policy, inflation
worries, and now the Omicron uncertainties," Action Economics said in its latest blog on the market.
    The dollar reversed gains to trade little changed on the day after the release of a weaker-than-expected
U.S. jobs report,
 which still included positive revisions for previous months and solid details about the labor market.
Market participants viewed the payrolls report as not really altering the Fed's plan to accelerate tapering
of its asset purchases and possibly raise interest rates multiple times next year despite the Omicron
    U.S. non-farm payrolls increased by 210,000 jobs last month, the Labor Department reported. Economists
polled by Reuters had forecast payrolls would rise by 550,000 jobs.
    October's job growth was revised up to 546,000 positions from the initial estimate of 531,000 and
September's jump was increased to 379,000 from 321,000, for a net 82,000 two-month gain.
    The unemployment rate also dropped to 4.2% from 4.6%, the lowest level since February 2020.
    "Despite today's mixed payrolls report, we think the bigger picture remains that sustained inflationary
pressures in the U.S. are likely to support faster policy normalization by the Fed and keep the dollar
strong," said Jonathan Petersen, markets economist at Capital Economics.
    Federal funds rate futures, which track short-term interest rate expectations, late on Friday
priced in a 74% chance of a quarter-percentage-point increase in the Fed's benchmark overnight interest rate
by May 2022. That probability was as high as 86% following the release of the jobs report.
    In afternoon trading, the dollar index was up slightly on the day at 96.146. The greenback will
end broadly unchanged on the week despite rallying last week to its highest level since July of last year.
    Petersen of Capital Economics said the dollar's value reflected the "offsetting effects of rising
short-term yields in the U.S., particularly after Chair (Jerome) Powell's (hawkish) comments to Congress on
Wednesday, and falling long-term yields amid growing concerns about the Omicron variant."
    The euro was up 0.1% at $1.1307.
    Against the yen, the dollar dropped 0.4% to 112.75 yen. Versus the Swiss franc, the dollar
slid 0.2% to 0.9179 francs.
    Also on Friday, the U.S. Treasury released its semi-annual currency report, which singled out Vietnam
and Taiwan as countries that continued to exceed its thresholds for possible currency manipulation and
enhanced analysis under a 2015 U.S. trade law. However, it refrained from formally calling them
    The currencies of the countries mentioned - the Vietnamese dong and Taiwanese dollar -
showed little reaction to the report.
    In emerging markets, Turkey's volatile lira edged near to its record low on Friday,
triggering direct central bank intervention to sell dollars. The U.S. dollar was last up 0.6%
at 13.745 liras.

    Currency bid prices at 3:32 PM (2032 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change
 Dollar index                 96.1390        96.0900     +0.07%         6.844%        +96.4510    +95.9440
 Euro/Dollar                  $1.1309        $1.1301     +0.07%         -7.44%        +$1.1334    +$1.1267
 Dollar/Yen                   112.7600       113.2050    -0.38%         +9.14%        +113.6050   +112.5600
 Euro/Yen                     127.52         127.90      -0.30%         +0.47%        +128.3400   +127.3900
 Dollar/Swiss                 0.9179         0.9202      -0.24%         +3.76%        +0.9217     +0.9166
 Sterling/Dollar              $1.3232        $1.3298     -0.52%         -3.17%        +$1.3309    +$1.3209
 Dollar/Canadian              1.2833         1.2806      +0.22%         +0.79%        +1.2846     +1.2744
 Aussie/Dollar                $0.7000        $0.7094     -1.31%         -8.99%        +$0.7095    +$0.6994
 Euro/Swiss                   1.0380         1.0400      -0.19%         -3.95%        +1.0408     +1.0377
 Euro/Sterling                0.8544         0.8494      +0.59%         -4.40%        +0.8550     +0.8493
 NZ                           $0.6748        $0.6817     -0.98%         -6.00%        +$0.6818    +$0.6743
 Dollar/Norway                9.1835         9.0985      +0.96%         +6.97%        +9.1920     +9.0955
 Euro/Norway                  10.3860        10.2708     +1.12%         -0.77%        +10.3970    +10.2689
 Dollar/Sweden                9.1457         9.0464      +1.08%         +11.58%       +9.1802     +9.0440
 Euro/Sweden                  10.3425        10.2324     +1.08%         +2.64%        +10.3515    +10.2244

 (Reporting by Gertrude Chavez-Dreyfuss; Editing by David Evans and Paul Simao)

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