Dollar falters due to low inflation, eyes on jobs data

The dollar index/, which measures the currency against six major peers including the yen and the euro, rose 0.191% to 104.840 but was not far off Thursday’s low of 104.56, the lowest since Aug. 11.

Data on Thursday showed US consumer spending in October rose at its biggest pace since January and the labor market remained resilient, with the number of Americans filing new claims for unemployment benefits declining last week. .

Federal Reserve Chairman Jerome Powell said Wednesday it is time to slow rate hikes, noting that “slowing down at this point is a good way to balance risks.”

The data “reinforces the market view that the FOMC is nearing the end of its monetary tightening cycle,” said Carol Kong, a strategist at Commonwealth Bank of Australia, and that weighed on the US dollar.

Investors now turn their attention to non-farm payrolls data on Friday for clues about how the rate hike has affected the labor market.

“In near term, currency market will be driven by US payroll report and market is closely monitoring any sign of FOMC pivot and weak report will weigh on dollar today,” said Kong.

The prospect of the Fed slowing its pace of monetary tightening has revived investor sentiment and the dollar edged lower after four straight 75 basis points gains that fueled the greenback’s climb this year. Is.

Futures traders are now pricing in a May peak of 4.87% for the Fed’s benchmark rate, up from 3.83% now. Traders had priced in more than 5% ahead of Powell’s comments on Wednesday.

Meanwhile, the dollar was 0.05% lower at 135.25 yen, having earlier slipped to a low of 135.045 yen – the lowest since Aug. 18.

The euro fell 0.1% to $1.0512 after gaining 1% overnight, while sterling was last trading at $1.2237, down 0.13% on the day. The pound rose 1.7% overnight and touched a 5-month high of $1.2311.

The text of this story is published from a wire agency feed without any modification.