Investing.com - The dollar held onto modest gains against the other major currencies in quiet trade on Wednesday, as optimism over the U.S. job market continued to support, although global geopolitical tensions still dominated investors’ attention.
The greenback remained supported as strong U.S. job openings and nonfarm payrolls data fueled expectations the Federal Reserve will stick to its plans for a third interest rate hike this year.
Investors were now eyeing U.S. inflation reports later in the week for indications of whether the recovery in the dollar is sustainable in the longer term.
Earlier Wednesday, the U.S. Bureau of Labor Statistics said in a preliminary report that nonfarm productivity rose 0.9% in the second quarter, exceeding expectations for an uptick of 0.7%.
The report also showed that unit labor costs edged up 0.6% in the three months to June, compared to expectations for a 1.2% gain.
USD/JPY was down 0.25% at 110.06, off a two-month low of 109.56 hit earlier in the day after U.S. President Donald Trump said North Korea would be "met with fire and fury" if it continued its threats.
Pyongyang replied it was "carefully examining" a plan to strike Guam, where a U.S. military base is located.
Meanwhile, USD/CHF slid 0.78% to 0.9666 and EUR/CHF retreated 0.92% to trade at 1.13, off earlier lows of 1.1261.
The Swissie’s sharp rise against the euro marked the largest one day change since the Swiss National Bank shocked markets when it scrapped its currency peg with the single currency in January 2015.
The dollar remained moderately higher against the euro, with EUR/USD up 0.15% at 1.1734, while GBP/USD held steady at 1.2981.
The Australian and New Zealand dollars were weaker, with AUD/USD down 0.39% at 0.7882 and with NZD/USD slipping 0.11% to 0.7322 as market participants were eyeing the Reserve Bank of New Zealand’s monthly policy decision due later in the day.
The RBNZ was expected to leave interest rates unchanged at 1.75% but investors will especially be paying attention to the central bank’s rhetoric for any hints on future policy moves.
Meanwhile, USD/CAD gained 0.30% to trade at 1.2703, not far from Monday’s three-week high of 1.2714, after Statistics Canada said building permits increased by 2.5% in June, beating expectations for a 2.0% drop.
A separate report showed that housing starts increased to 222,300 last month from 212,900 in June, whose figure was revised from a previously estimated 212,700 gain. Analysts had expected housing starts to hit 205,000 in July.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.10% at 93.57, just off a one-week peak of 93.77 hit earlier in the session.