The dollar falls to more than 3 weeks with the payroll in sight – Markets
NEW YORK: The dollar hit its lowest level in more than three weeks against a basket of currencies on Tuesday, as investors waited for US jobs figures later this week to get a glimpse of the possible path of the US Federal Reserve’s monetary policy.
The greenback has struggled since Federal Reserve Chairman Jerome Powell told the Jackson Hole conference on Friday that the cut could start this year, but the central bank was in no rush to raise rates of interest.
“If the number of employees disappoints, then the Eurodollar has another excuse to trade higher again, as it will again bring out all the doves saying that the Fed is not going to decrease in September,” said Erik Bregar, director and Head of FX Strategy at the Exchange Bank of Canada in Toronto.
The dollar briefly reduced some of its decline during the session after the S&P CoreLogic Case-Shiller Composite Index of 20 metropolitan areas showed that single-family home prices in the United States rose in June compared to the the previous year at the fastest pace on record.
The greenback’s instability ensued as a weaker-than-expected Chicago PMI for August saw the dollar trim its decline, only to then drop once more after the Conference Board reading for consumer confidence fell short of expectations.
Oil drops as US pushes OPEC to pump more
Investors will look at a series of US data later this week to assess the strength of the labor market, culminating with the expected payroll figures on Friday, with the aim of determining when the Fed may start to tighten policy.
“All of these releases have minor influences, but if you’re looking for a big hit, maybe wait until Friday,” Bregar said.
Analysts said Tuesday’s trade could also be influenced by the rebalancing of the equity portfolio at the end of the month, which could lead to flows into the Canadian dollar, British pound and Swiss franc and out of the greenback.
The dollar index fell 0.256%, the euro up 0.28% to $ 1.1828.
The dollar hit a low of 92.395 that day, its lowest level since August 6, but it is still up nearly 0.5% for the month.
Data earlier today showed eurozone inflation hit its highest level in 10 years this month, as consumer prices in the 19 countries sharing the euro rose 3%.
The British pound strengthened to a two-week high of $ 1.38010 and was last trading at $ 1.3799, up 0.30% on the day.
The Japanese yen strengthened 0.27% against the greenback to 109.60 per dollar.