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The dollar nursed modest losses on Thursday, having suffered a setback on fresh signs that the US economy slowed significantly in the first quarter which could delay the Federal Reserve’s decision to begin hiking interest rates.
The dollar fell as far as 119.42 yen overnight, from levels above 120.00. It last fetched 119.57, down 0.2 per cent on the day.
Private employment data
Data on Wednesday had showed that US private employers added the smallest number of workers in more than a year in March and factory activity hit a near two-year low, highlighting the impact of a harsh winter, weaker global demand and a strong dollar.
“Right now the market’s worry is the Fed showing concern about a strong dollar, and the data only compounded such fears,’’ said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.
“Even if Friday’s non-farm payroll number is decent — it could come in around 250,000 — that might not dispel strong dollar concerns. That is why there isn’t much bargain hunting for the dollar,’’ he said.
Non-farm payrolls data
For the closely-watched US non-farm jobs data due on Friday analysts polled by Reuters expect a rise of 245,000 in March, following a gain of 290,000 in February.
“Another print above 200,000 in March would represent the 13th in a row, a string of persistent strength that has not been seen since 1977,’’ said Greg Moore, senior currency strategist at RBC.
US Treasury yields
Treasury yields fell with the benchmark 10-year yield sliding back below 1.9 per cent. That in turn undermined the greenback, which lost ground against a basket of major currencies.
In contrast to the United States, figures out of Europe were much more encouraging with manufacturing activity across the euro zone accelerating and adding to signs the bloc’s economy is recovering.
Greece debt talks
The euro climbed to $1.0800, from one-week lows of $1.0713. It last stood flat at $1.0764. Wariness over Greece’s debt negotiations with lenders prevented the euro from making more gains.
Among commodity currencies, the Canadian dollar benefited from a jump in oil prices. But persistent weak iron ore prices kept its Australian counterpart under pressure, while a further fall in dairy prices weighed on the New Zealand dollar.
The loonie last stood at C$1.2610 per USD, continuing to recover from this week’s low of C$1.2784 per USD after oil jumped as much as 5 per cent on Wednesday.
The Aussie was down 0.3 per cent at $0.7579, languishing near a six-year trough of $0.7561 as the prices of iron ore, Australia’s single biggest export earner, hit fresh lows.
Expectations that the Reserve Bank of Australia will ease policy further also kept the Aussie on the defensive.
Also weighed by rising supply, international milk prices fell in this month’s first auction held by New Zealand’s Fonterra Co-operative Group, the world’s biggest dairy exporter.
That knocked the kiwi to a two-week low of $0.7392 overnight. It has since recovered to $0.7451.
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