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Dollar edges lower ahead of key employment data

written by Bella Palmer
dollar

The Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 97.810

The U.S. dollar edged lower Thursday ahead of key employment data, while the euro held at a one-month high against the greenback on hopes the Ukraine/Russia conflict is heading towards a de-escalation phase.

At 0705 GMT, the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 97.810.

The U.S. dollar received a boost Wednesday after data from the ADP Research Institute showed that U.S. companies employed an additional 455,000 people in March, growth which is consistent with the Federal Reserve’s view that the labour market is robust.

This comes ahead of Thursday’s weekly initial jobless claims data and, more importantly, Friday’s monthly official jobs report.

The U.S. Federal Reserve lifted interest rates earlier this month and signalled a series of increases ahead to combat soaring inflation, so long as the economy didn’t retreat into recession, as an inverted yield curve has warned about.

The strength of the labour market suggests the Fed will feel confident about going ahead with more interest rate hikes in the months ahead, to the benefit of the dollar.

USD/JPY traded 0.2% lower at 121.58, stabilizing after climbing to its lowest since November 2015 on Monday, with the Bank of Japan’s intervention to prevent government bond yields from rising too high in stark contrast to the U.S. Federal Reserve’s approach.

Elsewhere, EUR/USD rose 0.1% to 1.1172, with the single currency gaining around 1.6% this week, climbing to its highest level in a month, on increasing hopes that the conflict in Ukraine could be approaching a conclusion.

GBP/USD rose 0.1% to 1.3140, helped by data showing Britain's economy grew more quickly than previously thought in the last three months of 2021, with GDP increasing by 1.3% in the fourth quarter from the previous three-month period, stronger than a preliminary estimate of growth of 1.0%.

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