Dollar drops as traders wait for US jobs data

An employee counts US dollar banknotes at a currency exchange office in central Cairo, Egypt, March 20, 2019. REUTERS / Mohamed Abd El Ghany./File Photo

  • Dollar index down 0.2%
  • British pound extends rebound from 9-month low

NEW YORK, Oct.4 (Reuters) – The dollar slipped against a basket of currencies on Monday, retreating from a year-long high last week, as traders turned to employment data in the United States at the end of the week to find clues about the federal government. Next movement of the reserve.

The US dollar currency index, which measures the greenback against a basket of six currencies, was down 0.2% to 93.802. The index rose 0.8% last week to reach its highest since late September 2020.

With mainland Chinese markets closed until Thursday for the National Day and South Korean markets also closed on Monday, investors’ attention was firmly on the upcoming US data.

“Non-farm payrolls will be the focus of market concerns this week,” Brad Bechtel, global head of foreign exchange at Jefferies in New York.

Friday’s data is expected to show continued improvement in the labor market, with a forecast to create 488,000 jobs in September, according to a Reuters poll – enough to keep the Federal Reserve on track to start shrinking before the end of the year. ‘year.

The Fed has signaled it will likely start cutting its monthly bond purchases as early as November, but a big drop in jobs data could delay its plans, traders worry.

“Will the Fed react negatively to an impression of 300,000? Probably not. With the momentum on the cut already very high, the Fed will find it difficult to do an about-face after a small setback on what has been a very volatile series, ”Bechtel said. .

“If we were to see something more extreme like a negative NFP impression for example, then we might have a different story and the Fed might be forced to at least take a break,” he said.

The dollar found little support in data on Monday which showed new orders for products made in the United States accelerated in August, even as economic growth appeared to have slowed in the third quarter due to material shortages. raw and labor-intensive. Read more

Still, forex speculators have become increasingly bullish on the U.S. dollar in recent weeks, with net long bets on the U.S. dollar reaching their highest level since March 2020, data showed Friday.

Speculators are the most bullish on the dollar since March 2020

As oil prices hit an almost 7-year high, the greenback has been particularly weak against the energy-sensitive Norwegian krone and the Canadian dollar.

The dollar fell 0.6% against the krona and slipped 0.5% against the loonie.

The British pound was up 0.5% to $ 1.3611, extending its rebound from the 9-month low reached last week.

“We believe the pound sterling is still on fragile footing as the country is likely to experience further energy and food shortages in the fourth quarter. This, combined with strong US data this week, could see the pound retest the area. 1.34 and resume its September decline, ”said Shaun Osborne, chief currency strategist at Scotiabank.

Reporting by Saqib Iqbal Ahmed; Editing by Alison Williams and Sonya Hepinstall

Our Standards: The Thomson Reuters Trust Principles.

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