The U.S. dollar index was little changed at 104.12, not far from this week’s low of 103.99, the first time it had broken below 104 since April 9
The dollar hovered around eight-week lows on Friday ahead of a crucial U.S. jobs report that could give investors a better idea of when the Fed might start reducing interest rates.
The euro held on to overnight gains after the ECB cut rates in a well-telegraphed move, but offered few hints about the outlook for monetary policy given that inflation is still above target.
The U.S. dollar index, which tracks the currency against the major peers, was little changed at 104.12 as of 0845 GMT, not far from this week’s low of 103.99, the first time it had broken below 104 since April 9.
For the week, the index was on track for a 0.54% decline after a run of weaker macro data that prompted investors to put two quarter-point Fed rate reductions back on the table for this year.
That has seen traders positioned for a softer non-farm payrolls report later in the day, with the possibility that jobs growth comes in below the 185,000 median forecast of economists.
The FOMC is not expected to make any change at its policy meeting next week, but markets currently price in 50 bps of cuts by end-December, with the first cut most likely coming in September.
It’s anyone’s guess, but I think if we get a weak number, we are going to see further declines in bond yields – that will be good news for stocks, according to Kathleen Brooks, research director at trading platform XTB.
But if we get something in the 180, 190, 200 thousand level, something that is basically suggesting expansion in the labour market, then we could see a bit of that turn around and the dollar gaining some strength, she added.
