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Dollar under pressure ahead of US jobs report

The dollar was under pressure on Thursday after a batch of weak US data dented hopes for an early interest rate hike, with investors awaiting a key jobs report.

In Tokyo, the greenback weakened to 119.64 yen from 119.76 yen in New York.

The euro rose to $1.0773 and 128.89 yen, from $1.0760 and 128.86 yen.

“It seems that the market is still waiting for payrolls to make any new substantial moves,” National Australia Bank said in a commentary, adding that investors still think the Federal Reserve “is on track for rate lift-off over the next few meetings”.

On Wednesday, data showed US construction spending dipped in February, while growth in the manufacturing sector slowed for the fifth straight month in March.

Adding to the gloom, a report from payrolls firm ADP showed a slump in business hiring in March, ahead of Friday’s closely watched government labour report for the same month.

Investors will be hoping to find out if the world’s top economy is strong enough to absorb an interest rate hike, which is expected by the end of the year. A rate rise is a plus for the dollar.

“Despite the price swings, market sentiment is for dollar buying now and waiting for good economic figures,” Keisuke Hino, a foreign-exchange trader at Mizuho Bank, told Bloomberg News.

“If Friday’s payrolls data is weak, it could set the tone for dollar selling.”

The yen had faced selling pressure earlier Wednesday after a disappointing business confidence survey by the Bank of Japan showed firms are increasingly pessimistic about a rebound in the world’s number-three economy.

The report, which follows a weak batch of factory output and inflation figures, has fuelled speculation that the central bank will be forced to unveil more stimulus this year.

Traders are also tracking the situation in Greece as Athens tries to convince its international creditors to accept proposals for reforming its bailout programme.

Source: AFP

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