Investing.com – The dollar fell against a basket of major currencies on Wednesday after data showed weakness in the labor market ahead of the release of the Federal Reserve’s September 19-20 meeting minutes.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.18% to 92.92.
The U.S. Labor Department's latest Job Openings and Labor Turnover Survey (JOLTs) report, a measure of labor demand, showed job openings in August fell to 6.082m, falling short of expectations of 6.125m.
The downbeat job openings report comes just hours ahead of the minutes of the Federal Reserve’s September 19-20 meeting at which the U.S. central kept rates unchanged and announced that it would begin to unwind its massive portfolio of bonds in October.
Investors will parse the minutes for fresh insight into the Fed’s thinking on near-term headwinds in the economy and outlook concerning the pace of rate hikes amid growing expectations that the central bank will hike rates in December.
According to Investing.com’s fed rate monitor tool nearly 90% of traders expect the Fed to hikes rate in December compared to just 80% in the previous week.
Despite expectations of a December rate hike, the dollar has struggled to maintain upside momentum and is set for its fourth-straight daily loss. Some analysts noted a potential year-end rate hike could stifle inflation, limited gains in the dollar.
“The USD may therefore not be able to glean significant support from Fed policy this year particularly given speculation that a December rate hike could suppress inflation potential and so reduce the overall trajectory of Fed rates this cycle,” said Jane Foley, senior FX strategist at Rabobank.
Also adding to dollar weakness was an uptick in the euro after Catalonia leader Carles Puigdemont put declaration of independence on hold to continue talks with Spain.
EUR/USD added 0.32% to $1.1846, while eur/gbp rose 0.25% to £0.8965.
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