By Brigid Riley
TOKYO (Reuters) – Major currencies remained jittery on Friday as markets considered the impact of a politically turbulent week that saw the fall of the French government and a short-lived state of emergency in South Korea.
The US dollar jumped against the South Korean won after local media reported that South Korea’s main opposition Democratic Party said lawmakers were on alert after receiving reports of another state of emergency.
The won was last down 0.43% at 1419.32.
South Korean President Yoon Suk Yeol shocked the nation and his ruling People’s Power Party on Tuesday when he imposed a state of emergency and then lifted it hours later, sending jitters across global financial markets.
The political upheaval kept Korean markets on edge even as authorities promised to provide ‘unlimited liquidity’ to stabilize conditions.
In cryptocurrencies, bitcoin took a breather after surging above $100,000 for the first time a day earlier, and even skeptics now expect the crypto-friendly Trump administration to spur an extended rally.
On the broader economic front, the focus will be on the US non-farm payrolls report for November due later in the day, as investors await another assessment of the pace of future Federal Reserve rate cuts.
Payrolls were expected to have increased by 200,000 jobs last month, according to a Reuters poll, after rising by just 12,000 in October, the smallest number since December 2020.
“The Fed will be cautious about placing too much importance on the expected large wage increase in November,” said Sean Callow, senior foreign exchange analyst at InTouch Capital Markets.
“Until the unemployment rate falls back to 4.0%, markets should feel comfortable about leaning toward a rate cut this month, which should keep the dollar up.”
Markets currently see about a 72% chance the Federal Reserve will cut rates by 25 basis points when it meets Dec. 17-18, up from 66.5% a week ago, the CME FedWatch tool showed.
which measures the dollar against six rivals, rose 0.10% to 105.82 after slipping to a three-week low in the previous session.
The euro slipped 0.14% to $1.0574 after surging on Thursday as French bonds steadied, pulling back from the two-year low of $1.03315 hit in late November.
French President Emmanuel Macron met with allies and parliamentary leaders on Thursday as he sought to quickly appoint a new prime minister to replace Michel Barnier, who formally resigned a day after opposition lawmakers voted to oust his government.
For now, the European Central Bank is not expected to react to heightened political turmoil in Europe when it meets next week.
All but two of 75 economists polled by Reuters believe the ECB will cut 25 basis points from its deposit rate on December 12.
Traders are also almost certain of a favorable rate next week.
The euro bloc’s currency was on track to record a loss this week, its fourth in five weeks.
FORECASTS OF FLOOR RATE IN ŽIŠTO
Traders are mulling the likelihood of a rate hike at the Bank of Japan’s Dec. 18-19 meeting after media reports on Wednesday suggested the BOJ could remain on its feet this month, confounding market expectations.
But comments from typically dodgy policymaker Toyoaki Nakamura that he was not opposed to a rate hike helped push the currency on Thursday.
The dollar fell 0.06% against the yen to 149.98. Government data showed that Japanese household spending fell 1.3% in October from a year earlier, better than expected.
Sterling was trading at $1.2746, down 0.11% on the day.
In cryptocurrencies, bitcoin drifted lower as traders took profits after Thursday’s break above the $100,000 mark.
The world’s most famous cryptocurrency has been under fire since November amid bets that Donald Trump’s victory in the US presidential election will lead to a friendlier regulatory environment for cryptocurrencies.
Trump said Thursday that he is appointing former PayPal (NASDAQ: ) COO David Sacks as his artificial intelligence and cryptocurrency czar.
it briefly fell to a one-week low and was last down 1.11% at $97,911, far from the record high of $103,649 hit the previous day.
