Dollar Down ahead Non-farm Payrolls Data
The dollar nursed losses against major currencies in forex trading on Friday. This was ahead of the U.S. non-farm payrolls report.
Some investors fear this could reinforce the view that momentum in the world’s largest economy is slowing.
Sentiment has turned against the dollar due to mixed economic issues. That is with the rising U.S. COVID-19 infections and a steady decline in Treasury yields. In addition, a lack of consensus in Washington over additional fiscal stimulus causes dollar weakness.
Analysts say the greenback will continue to fall, particularly against the euro, the yen and Swiss franc. This is as expectations for a V-shaped recovery from the coronavirus epidemic fade. Moreover, as investors take a more sanguine view of markets.
Michael McCarthy, chief market strategist at CMC Markets in Sydney said, he sees further dollar weakness.
Optimism for an economic recovery is not backed up by data, safe-havens are very high, but stocks are also high. McCarthy said it doesn’t make sense, and that the party has to end at some point.
Against the euro , the dollar stood at $1.1868 in forex on Friday. It was close to its weakest in over two years.
The British pound bought $1.3134, close to its strongest since March 2020. The greenback teetered near a five-year low against the safe-harbour Swiss franc at 0.9109.
The dollar traded at 105.57 against the yen, not far from a four-month low.
Due later on Friday, non-farm payrolls are widely expected to show U.S. jobs creation slowed from July to June. This indicates a resurgence in coronavirus infections is undermining the economic recovery there.
The five-year Treasury yield hit an all-time low earlier this week. The benchmark 10-year yield fell to its second-lowest ever, further reasons to shun the greenback.
The Dollar is Out of Favor
Forex news reports the dollar index last stood at 92.864, close to a two-year low.
U.S. Republicans and Democrats failed to reach an agreement on the cost of fiscal stimulus measures. Many investors say it is necessary to prevent the economy from losing more momentum.
Spot gold , another asset sought during times of heightened uncertainty, rose to a record high early in Asian trading. That’s another sign of the dollar’s woes.
Some investors in the FX markets are also worried about increasingly frayed Sino-U.S. relations.
President Trump issued an executive order on Thursday, banning transactions with ByteDance. Bytedance is a Chinese company that owns the video-sharing app TikTok, saying the app is a threat to national security.
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