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Thursday, 28 March 2024
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Weak dollar steadies before US jobs data
The dollar index fell to 98.816, shedding about 0.9 percent after hitting a year high this week. (File photo Reuters)

The dollar steadied on Friday before monthly jobs figures as weak manufacturing and services data this week raised concerns the US economy was losing momentum and could potentially under cut the greenback’s rally.


The dollar index fell to 98.816, shedding about 0.9 percent after hitting a 2-1/2-year high this week. It is down 0.3 percent on the week.


“Should today’s NFP report confirm that the US economy is losing its domestic demand strength, dollar weakness experienced from Monday’s high could broaden out, finding its best expression in short dollar/yen and long euro/dollar,” Morgan Stanley strategists said in a note.


The euro, which had been dogged by concerns Germany could slip into a recession, rose 0.1 percent to $1.0970, extending its recovery from a near 2-1/2-year low of $1.0879 set on Tuesday.


A survey from the US Institute for Supply Management (ISM) showed its non-manufacturing activity index falling to 52.6 in September, the lowest since August 2016, and far below expectations of 55.1, from 56.4 in August.


Coming on the heels of a similar survey on Tuesday on manufacturing showing activity plunging to more than 10-year lows, the weak data increased fears of a US recession.


The US service sector, backed by firm US domestic consumption, has been one of few bright spots in the global economy as the manufacturing sector worldwide has been knocked by the protracted US-China trade war.


That does not bode well for the upcoming all-important US jobs data on Friday, said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank, noting the employment component in the ISM has had a meaningful correlation with the payrolls data.


The median economists’ forecast polled by Reuters is for a rise of 145,000 in September, a tad below the average over the last 12 months around 173,000.


“A weak figure could cause the Fed to change its characterization of the labor market as ‘strong,’ which would give them more reason to ease,” said Marshall Gittler, chief strategist at ACLS Global.


Elsewhere, the Australian dollar and the New Zealand dollar held near the day’s highs thanks to broad dollar strength.