Dollar edges higher ahead of US jobs data

Dollar edges higher ahead of US jobs data

US dollar and Japanese yen banknotes are seen with a currency exchange rate graph in this illustration picture taken June 16, 2022. — Reuters pic

Friday, 05 Aug 2022 5:44 PM MYT

LONDON, Aug 5 — The US dollar edged higher today, attempting to recoup some losses after its sharpest daily drop in more than two weeks, as traders turned their attention to US jobs data for further clues about the strength of the economy.

The US dollar index, which measures the greenback against a basket of currencies, was up 0.21 per cent to 105.92, after sliding 0.68 per cent yesterday, the largest fall since July 19. It remains around 3 per cent below its mid-July high.

Investors await the key US nonfarm payrolls report due at 1230 GMT, which will provide hints of how the US economy is faring. Economists expect an increase of 250,000 jobs for the month of July, after 372,000 were added in June.

However, signs of softening in the labour market could already be underway, as data on Thursday showed that the number of Americans filing new claims for unemployment benefits increased last week.

“A far stronger than expected jobs report together with a considerable upside surprise in the average hourly earnings data in particular could see the USD broadly stronger,” said John Hardy, head of FX strategy at Saxo Bank.

The euro was down 0.17 per cent against the greenback to US$1.02285 (RM4.56), within in its relatively narrow range of US$1.01-US$1.03 that it’s been trading in since July 19, as concerns about an European energy crisis are offset by fears of a slowing US economy.

A stand-off over the return of a turbine that Russia says is holding back gas supplies to Europe showed no sign of being resolved yesterday, as Moscow said it needed documentation to confirm the equipment was not subject to sanctions.

Meanwhile, sterling was little changed at US$1.2156, a day after the Bank of England (BoE) raised rates by the most in 27 years to fight surging inflation, but warned a long recession was coming, beginning in the fourth quarter of this year.

“Ultimately, that’s one of the most dovish 50 basis point hikes I’ve seen,” said Justin McQueen, FX strategist at DailyFX.

“The BoE said we’re going to have a recession for five quarters, it highlights the bleak outlook for the UK economy and the pound.” Elsewhere, the US dollar rose 0.24 per cent against the Japanese yen to 133.27 per dollar, after tumbling 0.69 per cent yesterday.

The risk-sensitive Aussie and kiwi remained little changed at US$0.69605 and US$0.6299, respectively.

In cryptocurrencies, bitcoin was up 2.9 per cent to US$23,272.80. — Reuters