Dollar edges up vs euro as focus shifts to economic data
Jan 7 (Reuters) – The dollar hugged tight ranges on Wednesday ahead of a slew of U.S. economic data that could set the tone for the Federal Reserve’s rate outlook, a factor traders consider more consequential for currencies than ongoing geopolitical tensions.
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They were in a wait-and-see mode ahead of a batch of U.S. labour market data, with figures on private payrolls and job openings due later in the day, before Friday’s closely watched nonfarm payrolls report comes due.
Ahead of the outcome, the dollar index strengthened slightly to 98.63.
“Traders seem to be okay with the rhetoric coming from the U.S. when it does not imply that ‘boots on the ground’ will be needed to run Venezuela,” said Thierry Wizman, global forex and rates strategist at Macquarie Group.
“A military invasion and a prolonged on-the-ground conflict would have risked a major dollar depreciation, as did the Iraq and Afghanistan wars in 2002-2008,” he added.
Investors have struggled to get an accurate read of the world’s largest economy following a record U.S. government shutdown last year which hampered the collection and release of key economic data.
However, they remain convinced that the Fed will cut rates two more times this year.
EURO EDGES DOWN AS DATA WEIGH
Markets have been pricing policy rates to remain stable through 2026 since last summer, while expecting the European Central Bank to tighten policy in 2027 as inflationary pressures build from German fiscal stimulus.
The single currency was down 0.10% to $1.1676, after falling 0.28% on Tuesday.
The move didn’t impact the forex market, strategists said.
The greenback fell 0.10% against the Japanese yen to 156.51.
“The most impactful publication will be ADP’s monthly jobs report, as an uptick in unemployment is one of the significant risks in this new year, alongside the potential failure of heavy investments in AI to deliver blockbuster returns,” Jose Torres, senior economist at Interactive Brokers, said of Wednesday’s releases.
Reporting by Rae Wee and Stefano Rebaudo; Editing by Shri Navaratnam and Ros Russell
Our Standards: The Thomson Reuters Trust Principles.
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