Dollar in retreat; Payrolls release looms large

Dollar in retreat; Payrolls release looms large
Dollar in retreat; Payrolls release looms large
© Reuters

By Peter Nurse – The U.S. dollar edged lower in early European trade Friday ahead of the release of the widely watched monthly U.S. jobs report which could influence future Federal Reserve monetary policy.

At 03:05 ET (08:05 GMT), the , which tracks the greenback against a basket of six other currencies, fell 0.1% to 104.670, falling to its lowest level since August.

The dollar has been on the wane of late, having just recorded its worst month since 2010, as Federal Reserve Chair largely cemented expectations that the U.S. central bank is set to cut back the size of its hikes at its meeting later this month, the so-called pivot.

said on Wednesday that it was time to slow rate hikes, noting that “slowing down at this point is a good way to balance the risks,” and this view was helped by the October index, the Fed’s favorite gauge of inflation, decelerating more than expected, to 0.2% month-on-month from 0.5%.

Now, attention turns to the labor market.

The is expected to show that about 200,000 jobs were added in November, down from 261,000 the prior month, and a downside surprise could prompt hefty dollar losses.

slipped to 1.0518, after gains of around 1% in the previous session following a reasonably hawkish speech by European Central Bank President .

warned earlier Friday that some European governments’ fiscal policies could lead to excess demand, which would mean that monetary policies would need to be tighter than would otherwise be the case.

traded largely flat at 1.2254, having touched a 5-month high of 1.2311 overnight, while the risk-sensitive climbed 0.2% to 0.6824.

fell 0.5% to 134.65, with the yen being the best-performing Asian currency this week, up over 3% to an over-three-month high as falling removed some pressure.

fell 0.1% to 7.0378, with the yuan continuing to benefit from the fevered speculation that China will relax its strict anti-COVID policies amid growing public discontent over the restrictions.

Elsewhere, fell 0.4% to 17.5654, with the rand rebounding a touch after dropping more than 4% on Thursday following the news that an advisory panel found potential grounds for the of South African President Cyril Ramaphosa, following the theft of $580,000.

His departure could set back reforms aimed at bolstering economic growth, stabilizing public finances, and tackling graft.

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