Dollar falls vs majors, payrolls in view

LONDON - The dollar fell versus other major currencies on Friday in choppy conditions as investors tried to position themselves ahead of a key U.S. jobs report.

By (Reuters)

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Published: Fri 4 Apr 2008, 5:37 PM

Last updated: Sun 5 Apr 2015, 11:35 AM

Signals for non-farm payrolls have been mixed, with a surprise gain in private sector jobs in March offset by news that first-time applications for U.S. jobless benefits rose last week to a 2-1/2 year high.

But overall, investor sentiment has improved in recent sessions, and markets are now only expecting a 25 basis point rate cut from the Federal Reserve this month.

Economists polled by Reuters forecast the U.S. economy likely cut 60,000 jobs in March for its third straight month of losses, with the unemployment rate seen rising to 5.0 percent, from 4.8 percent in February.. The data is due at 1230 GMT.

“The market has been quite choppy really ... I’m still of the same view in terms of the dollar continuing to weaken over the next couple of months, but today short-term sentiment could go either way,” said Derek Halpenny, currency economist at BTM-UFJ.

“In terms of the macro economic impact (of the credit crunch) we’ve barely seen the beginning of this,” he added.

The dollar fell 0.2 percent against a basket of six currencies to 71.988, while the euro was up 0.3 percent on the day at $1.5728, but well off March’s record peak above $1.59.

Hourly technical charts showed the euro breaking through a 200-hour moving average located at $1.57. The dollar was steady at 102.32 yen and down at 1.0065 Swiss francs.

Has the fed done enough?

The Fed has slashed rates since September by a total of 3 percentage points to 2.25 percent to deal with the credit crisis and shield the economy from an ailing housing sector.

Late on Thursday, San Francisco Fed President Janet Yellen echoed comments on the economy made by Fed Chairman Ben Bernanke earlier this week, saying the U.S. economy has “all but stalled and could contract” in the first half of 2008.

ING said in a note to clients that it was in the “glass is half empty camp” on the global credit crunch.

Even though the bank was looking for a slightly stronger than expected payrolls number, it saw risks of a fall in excess of 100,000 and the unemployment rate rising to 5.0 percent.

“USD index can fall to 71,” ING added.

Elsewhere, the Australian dollar fell 0.2 percent to US$0.9180 after February retail sales unexpectedly dipped 0.1 percent from the previous month.

Reserve Bank of Australia Governor Glenn Stevens said on Friday that growth in domestic demand was moderating despite uncomfortably high inflation, suggesting that interest rates had risen enough for now.

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