Dollar near 2-week low, investors look to U.S. jobs data for next catalyst
TOKYO (Reuters) – The dollar hovered near two-week lows against a basket of currencies on Tuesday, as investors looked to U.S. jobs figures later this week for clues on taper timing, while the Chinese yuan shrugged off soft factory and services sector surveys.
The U.S. currency steadied from falls after Federal Reserve Chair Jerome Powell on Friday offered no signal on when the central bank plans to cut its asset purchases beyond saying it could be “this year.”
“The payroll data will be the next highlight given the focus on the Fed’s taper. A strong reading will boost expectations the Fed will give markets prior notice in September before a formal decision in November,” said Yukio Ishizuki, senior strategist at Daiwa Securities.
Weaker jobs numbers, due to be released on Friday, could instead cement a case for later action – a pre-announcement in November with a formal decision in December.
Trade on Tuesday, however, is likely to be driven more by month-end flows from various businesses for their import and export transactions, traders said.
The euro held firm at $1.1815, its highest levels since Aug. 6.
The euro zone’s consumer price data due at 0900 GMT is expected to show that inflation in the currency bloc has gathered pace in August though the rise will be widely seen as transitory.
Sterling fetched $1.3762 while the yen was little changed at 109.85 yen to the dollar.
The dollar index stood at 92.590, its lowest level in two weeks.
The offshore Chinese yuan was largely steady at 6.4666 per dollar, not far from a three-week high of 6.4595 touched on Friday, weathering the country’s twin Purchasing Manager’s Index (PMI) surveys showing intensifying pressure on the economy.
Manufacturing PMI dipped to 50.1 from 50.4 last month, showing factory activity expanded at a slower pace. The non-manufacturing PMI in August slumped to 47.5, the lowest reading since February 2020, hurt by coronavirus restrictions.
“The drop in the non-manufacturing PMI reflects the impact of the coronavirus. But the infections in China has already peaked and dwindled,” said Ei Kaku, senior strategist at Nomura Securities.
The currency is also supported by vague hopes of a thaw in U.S.-China diplomatic relations as U.S. climate envoy John Kerry is due to visit Tianjin, while U.S. Treasury Secretary is reportedly mulling a visit to China, she added.
The Australian dollar, often seen as a proxy bet on the Chinese economy, rose a tad to $0.7308,
The New Zealand dollar gained 0.5% to a three-week high of $0.7053. The move appeared to be triggered by stop-loss short-covering in the kiwi against the Aussie, analysts said.
Emerging market currencies also held firm, with the MSCI emerging market currency index hitting a three-week high of 1,733.93 on Monday. It last stood at 1,732.54.
In cryptocurrencies, bitcoin eased to $47,234 while ether held slightly firmer at $3,243.
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