Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Dollar Weakens Ahead of Key Payrolls Data

Published 02/08/2021, 08:32
Updated 02/08/2021, 08:32

By Peter Nurse

Investing.com - The dollar edged lower Monday, just above a one-month low, in tight trading ranges ahead of the release of key U.S. employment data later in the week which could influence Federal Reserve policy.

At 3:05 AM ET (0705 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 92.102, just above Friday’s low of 91.775, the weakest since June 28.

USD/JPY edged lower to 109.67, GBP/USD drifted higher to 1.3905, and EUR/USD traded largely flat at 1.1867, even with German retail sales surprising to the upside, growing 4.2% in June. .

The dollar index dropped close to 1% last week after Fed Chairman Jerome Powell stated, following the central bank’s July meeting, that interest rate increases were still a long way away and more economic progress was needed, particularly in terms of jobs being created, before the central bank started tapering its huge bond-buying program.

Fed board member Lael Brainard restated the central bank's focus on further labor market progress at the weekend, while Minnesota Fed President Neal Kashkari warned that the spread of the delta variant of Covid-19 could slow the economy in the second half.

This puts Friday’s July nonfarm payrolls release firmly into focus, with economists looking for an increase of 900,000 jobs, which would be the biggest increase for 11 months, after a forecast-beating 850,000 in June.

“A strong US jobs report is anticipated, and it will support speculation that at the Jackson Hole conference at the end of August, Chair Powell will provide more guidance about the pace and composition of the Fed's bond purchases,” said Marc Chandler, Chief Market Strategist at Bannockburn Global Forex.

Also of interest will be the meeting of the Reserve Bank of Australia early Tuesday, with this central bank under pressure given the Covid-19 lockdowns currently affecting much of the country.

“The lockdown in Sydney has been extended until the end of August, and the Reserve Bank of Australia will likely abort plans to reduce its bond-buying. Instead, it will likely provide more support, probably via increased bond purchases,” Chandler added.

At 3 AM ET, AUD/USD traded marginally lower at 0.7342, with the Australian dollar having been the only major currency to fall against the U.S. dollar last week.

USD/CNY rose 0.1% to 6.4645 after China’s factory activity growth slowed sharply in July, with the Caixin manufacturing purchasing managers’ index falling to 50.3, its lowest level since April 2020.

 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.