Dollar edges lower ahead of U.S. jobs data

TOKYO - The dollar edged lower against a basket of currencies on Friday with investors bracing for important U.S. jobs data which could decide the sustainability of the recent rally in risk assets such as high-yielding currencies.

By (Reuters)

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Published: Fri 7 Aug 2009, 1:35 PM

Last updated: Thu 2 Apr 2015, 8:29 AM

The Australian dollar bounced briefly after the Reserve Bank of Australia’s upbeat comments on the economy affirmed expectations that a rate hike in Australia will come sooner rather later, but lower Asian stocks and caution ahead of the release of U.S. nonfarm payrolls data pared gains.

Investors were trimming long positions in risky assets, including stocks and the Aussie, which had lifted thoses assets to multi-months highs this week before the key U.S. data, traders said.

Sentiment in the overall market remained upbeat over the U.S. nonfarm payrolls, however, after data on Thursday showed a sharp drop in U.S. jobless claims last week, keeping economic recovery hopes in tact.

Economists forecast 320,000 jobs were lost in July compared with a loss of 467,000 jobs in June.

“In order to inject disappointment into the market, huge negative numbers like -450,000 or -500,000 may be needed,” said a senior trader for a Japanese brokerage firm.

The trader said overall sentiment towards a further rally in risk assets was so resilient that the market looked capable of brushing off negative numbers as big as 370,000 or 380,000 job losses.

The unemployment rate is seen at 9.6 percent, which would be the highest since June 1983, compared with 9.5 percent the previous month.

The dollar index, a gauge of its performance against six major currencies, edged down 0.1 percent from late U.S. trade on Thursday to 77.973, staying above 77.428 touched on Wednesday, a lowest point in more than 10 months.

The Australian dollar fell 0.2 percent to $0.8380, shedding gains near a 10-month peak of $0.8471 struck earlier this week. The Aussie slid 0.2 percent against the yen to 79.90 yen, also erasing earlier gains near its 10-month high of 80.81 yen hit on Tuesday.

“Among industrial nations Australia has higher interest rates. A view that its economy will benefit from demand from China, whose economy is supported by stimulus measures, is making investors tend to flock to the Aussie,” said Ayako Sera, a market strategist at Sumitomo Trust & Banking.

“That said, a full-fledged recovery in the global economy needs a recovery in the United States,” she said.

Sterling was little changed against the dollar on Friday after plunging the previous day when the Bank of England kept interest rates unchanged but surprised markets by raising the size of a bond purchasing programme designed to boost lending.

Sterling was steady at $1.6776 after investors were mostly through with cutting long positions in the currency after the BoE’s policy decision.

It fell more than 1 percent against the dollar on Thursday and retreated from this year’s peak of $1.7044 hit on the Reuters dealing system this week.

The euro was 0.1 percent higher at $1.4363 after the European Central Bank kept interest rates on hold at a record low on Thursday and hinted growth could return sooner than previously thought, although the euro zone economy will remain weak this year.

The euro earlier this week rose to a 2009 high of $1.4448 on trading platform EBS.

The dollar slipped 0.2 percent to 95.30 yen on selling from Japanese exporters repatriating overseas earnings, traders said.

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