The calendar may say June but it feels like May for the US dollar which slipped to one- and two-week lows against the euro and yen. Since notching one- and two-month highs early in the week against the yen and a currency basket, the dollar’s rise has given way to caution following a batch of data this week that painted a mixed picture of the world’s biggest economy. Investors also seem to be withholding a fresh round of dollar buying until they get to inspect tomorrow’s US employment report given the labour market’s big say on when the Federal Reserve raises interest rates. US hiring last month is forecast to look a lot like April when the economy added 160,000 jobs – a solid amount but the fewest in seven months. Ahead of Friday’s big US jobs report, attention today will be on the ECB, Opec, a trio of Fed speakers and US weekly jobless claims.
Euro
The euro seesawed around one-week peaks above $1.12 as traders reacted to new information from the ECB. The ECB left interest rates and its aggressive monetary policies unchanged while it slightly upgraded its forecasts for this year for growth and inflation. However, ECB president Mario Draghi left unchanged the bank’s modest forecasts for growth and inflation over the coming two years. The bloc’s slightly brighter outlook for 2016 fanned a modest relief rally for the single currency.
Sterling
The UK pound drifted above two-week lows but remained close to attractive levels for GBP buyers. Sterling sentiment dimmed this week after polls showed a close call as to whether Britons on June 23 would vote to remain in the EU. A future EU without Britain would open a big can of worms for UK assets, spell heightened uncertainty, and potentially pull the pound sharply lower. However, a vote to stay in the bloc is consider pound-positive as it would lift a big cloud of uncertainty over sterling and allow for a relief rally.
US dollar
Close to forecast US jobs data helped the dollar cut losses that took it earlier to one- and two-week lows against the euro and yen. Payrolls company ADP said that private employers added 173,000 jobs in May, above April’s upgraded 166,000, but slightly short of forecasts of 175,000. Weekly jobless claims fell by a thousand to healthy level of 268,000. Next to impact the buck will be the US jobs report, the final one before the Fed’s June 15 announcement. The dollar should find support in a jobs report that’s close to or above forecasts of 162,000 new hires, a tick down in unemployment to 4.9 per cent, and a modest 0.2 per cent rise in pay growth.