By Peter Nurse
Investing.com – The dollar fell to two-week lows in early European trade Tuesday, continuing the weakness stemming from Federal Reserve Chairman Jerome Powell’s dovish speech at the end of last week and looking ahead to Friday’s key employment report.
At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% lower at 92.472, just above its lowest level in a fortnight.
EUR/USD edged 0.3% higher to 1.1829, near its highest levels since the start of the month, USD/JPY was down 0.1% at 109.82, GBP/USD gained 0.3% to 1.3799, near a two-week high, and the risk sensitive AUD/USD climbed 0.6% to 0.7338.
The U.S. currency is still suffering the consequences of Federal Reserve Chair Jerome Powell declining on Friday to offer a firm signal on when the central bank plans to cut its asset purchases, surprising many in the market who had been looking for a concrete timetable.
“The most hawkish part of the FOMC has been extremely vocal in recent weeks, including the host of the Jackson Hole, Esther George, but it still seems as if the FOMC is yet to form a consensus/majority view on how to address tapering at the meeting in September,” said analysts at Nordea, in a note.
Helping the general risk-on tone was the official end of the U.S. military presence in Afghanistan, with the last aircraft departing from Kabul airport, meeting President Joe Biden’s timetable, without any further American casualties.
Attention now turns to Friday’s nonfarm payrolls release, particularly given the importance the central bank has placed upon a recovery in the labor market in its tapering thinking.
The payrolls are currently expected to increase by around 750,000 in August, a drop from the growth of 943,000 the previous month, but concerns are rising that the delay in outlining a timetable for tapering was caused by expectations of a poor number.
Weaker jobs numbers could instead cement a case for later action – perhaps a pre-announcement in November with a formal decision in December.
Elsewhere, USD/CNY edged 0.1% lower to 6.4619, not far removed from Friday’s three-week low of 6.4595, with the yuan largely weathering the disappointing economic data released earlier in the day.
Dollar Weakens as Key Nonfarm Payrolls Release Looms
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.