U.S. dollar holds gains after payrolls boost rate hike bets, kiwi rebounds on New Zealand vote

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US dollar holds gains

Highlights

The dollar index remains steady at 102.20 after a 0.7% surge Friday, supported by faster October U.S. jobs growth and a falling unemployment rate.
Fed rate hike expectations jump, with futures pricing a 79% chance of a December 9 increase, up from 71% a week earlier according to CME Group's FedWatch.
The New Zealand dollar rebounds 0.4% to $0.5557 as nearly 15% of votes remain uncounted after an inconclusive weekend election, with final results due November 27.

Dollar support builds on jobs data and Fed outlook

As reported by Reuters, the dollar index is steady at 102.20 early on Monday after jumping about 0.7% on Friday, when U.S. data show October jobs growth accelerating and the unemployment rate falling. The move keeps the greenback near a 1-1/2-year high against the euro and a seven-month high against the Australian dollar.

The euro edges up 0.1% to $1.11485 after dropping 0.7% on Friday and touching $1.1132, close to the previous week's low of $1.1105, its weakest level since May 2025. The Aussie adds 0.3% to $0.6875 after sliding more than 1% on Friday to $0.6855, the lowest since March 31, while the dollar eases 0.2% to 158.185 yen following a 0.6% jump at the end of last week.

Rate expectations also continue to shift. Futures imply about a 79% chance that the Federal Reserve raises rates on December 9, up from 71% a week earlier, according to CME Group's FedWatch tool.

Comments from Fed officials reinforce that view. New York Fed President John Williams says U.S. growth remains resilient despite repeated shocks, while inflation is still too high and must return to 2%. St. Louis Fed President Alberto Musalem says inflation remains a top concern for businesses in his district, and San Francisco Fed President Mary Daly says the central bank will likely still need to tighten further even after the recent tech-stock selloff.

Barclays strategists say the Democrats' midterm sweep has tested the AI trade because of heavier regulatory risks and a possible slowdown in capital spending, but strong economic momentum across indicators continues to support the dollar's appeal.

New Zealand election uncertainty lifts kiwi

The New Zealand dollar climbs 0.4% to $0.5557 on Monday after falling to $0.5529 at the end of last week, a seven-month trough. The rebound comes after a weekend election result that is too close to settle the next government and weakens the incumbent's position.

Preliminary results give Prime Minister Christopher Luxon's National Party, ACT New Zealand and New Zealand First 67 seats in the 131-seat parliament, just one above the 66 needed for a majority. Nearly 400,000 votes, or almost 15% of the total, still need to be counted, and official results are due on November 27.

Luxon and Labour leader Chris Hipkins both say they will wait for the final count before entering formal coalition negotiations. Elsewhere, sterling edges up 0.1% to $1.3360 and the U.S. dollar slips 0.1% to C$1.4119 after surging 1.1% against the Canadian dollar on Friday, when Canadian data show unexpected job losses.

In our earlier article on UBS Global Wealth Management’s outlook for the Federal Reserve, we covered the bank’s call for a longer tightening cycle as inflation pressures stay persistent. UBS projected additional rate hikes in December and again in March 2027, noting that firm goods and services inflation and overlapping risks could keep policy restrictive for longer.

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