Dollar edges lower, handing back recent gains ahead of jobless data

Published 01/04/2024, 04:19 AM
© Reuters.
EUR/USD
-
GBP/USD
-
USD/JPY
-
USD/CNY
-

Investing.com - The U.S. dollar retreated from the previous session’s three-week peak in early European trade Thursday as traders digested the minutes of the Federal Reserve’s December meeting ahead of weekly jobless data.

At 04:20 ET (09:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% lower at 102.017, having hit a three-week peak of 102.73 in the previous session.

Dollar slips from recent highs

The minutes of the Fed's December policy meeting, released late on Wednesday, showed officials were convinced inflation was coming under control and were concerned about the risks of the central bank's "overly restrictive" monetary policy on the economy.

However, they provided little clarity on the timetable for rate cuts this year.

“The conditionality attached to cutting rates is hawkish in the sense that it puts pressure on markets to unwind the March easing bets, but the risks flagged to the economic outlook and discussion about exiting quantitative tightening are unequivocally dovish,” said analysts at ING, in a note.

Attention will now turn to the weekly jobless claims data later Thursday, ahead of Friday’s closely watched U.S. nonfarm payrolls report, which will likely give further clarity on how much room the Fed has to lower rates. 

Euro edges higher after French CPI

In Europe, EUR/USD traded 0.2% higher at 1.0947, after the latest French inflation figures came in slightly weaker than expected - rising 0.1% on the month in December, an annual rise of 3.7%.

German regional inflation figures have also started emerging Thursday, with the eurozone-wide CPI release due on Friday.

“The ability of the euro to benefit from some unwinding of rate cut bets must be weighed against evidence that the EUR/USD is primarily driven by equity/risk sentiment factors at the moment, and the short-term rate differentials remain heavily unfavourable for the euro,” ING added.

GBP/USD rose 0.2% to 1.2692, with sterling not far above its recent three-week low at 1.2667.

Yen retreats after weak PMI data

Elsewhere, USD/JPY traded 0.3% higher to 143.74, with the yen weakening after purchasing managers index data showed that Japanese economic activity remained fragile, as the manufacturing sector remained in contraction in December.

USD/CNY edged higher to 7.1517, with sentiment towards China dealt a fresh blow by Fitch downgrading the ratings of four major state-backed asset managers, and placing three of them on watch for more cuts. 

 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.