By William L. Watts and Sarah Turner, MarketWatch
LONDON (MarketWatch) — The U.S. dollar held its ground versus major rivals Friday as traders awaited key U.S. jobs data, a day after the currency rebounded sharply as commodities suffered a dramatic rout.
The dollar index DXY -0.17% , which measures the greenback against a basket of six currencies, traded at 74.122 on Friday, down slightly from 74.143 recorded in late North American trading Thursday.
Investors had pushed the dollar sharply higher Thursday as they fretted about exposure to riskier assets, including stocks and commodities, amid signs that economic growth may be faltering.
Among those signs was the release of weaker-than-expected U.S. jobless claims data, with claims up 43,000 to 474,000 in the past week. Economists had expected claims to decline to 412,000.
Friday’s payrolls data will likely consume the market’s focus and economists surveyed by MarketWatch are expecting payrolls to rise by 175,000 in April, slower than the 205,000 average increase in February and March. Read nonfarm preview.
“From a big-picture perspective, not a huge amount has changed, but there was some ‘froth’ in the U.S. dollar downtrend, and dollar bears are likely to hide away at least until next week,” said Adrian Schmidt, currency strategist at Lloyds TSB. “Nevertheless, the dollar gains were so sharp yesterday that some modest recovery in risky currencies is likely today on neutral data.”
Currency strategists at BNP Paribas said that, with this week’s rise in initial jobless claims, weak ADP employment report, and lackluster reading for the employment index component of the U.S. non-manufacturing ISM, payrolls are likely to undershoot consensus expectations.
“In our view, a number within the 100,000 to 185,000 or a very strong number would be U.S.-dollar-negative and may even reverse the recent commodity slide. However, a number below 100,000 would likely be U.S.-dollar-positive, as global growth concerns may start coming into play,” they said.
Poor U.S. data sometimes help the dollar, as investors see it as a safe haven against concerns of a faltering global economic recovery.
The euro EURUSD -0.0757% traded at $1.4526 on Friday, little changed from $1.4524 in late North American trading on Thursday.
The greenback rose by the most since January 2009 against the euro on Thursday after European Central Bank President Jean-Claude Trichet didn’t suggest that more rate hikes were imminent at his monthly news conference. Read more on ECB decision.
“Mr. Trichet refused to signal another ECB rate hike, prompting a huge liquidation of euro longs that spilled over into the commodities and equity markets,” said Boris Schlossberg, director of currency research at GFT, in emailed comments. “In today’s session, the market tried to find a bottom testing the $1.4500 support in [euro/dollar] multiple times, with the pair holding support for now.”
The Australian dollar AUDUSD +0.91% jumped as high as $1.0733 versus the U.S. unit on Friday after the Reserve Bank of Australia said that further policy tightening will be required “at some point” to keep inflation within its 2%-3% medium-term target range. It changed hands in recent action at $1.0675, a gain of 0.6% from Thursday.
The Australian dollar sank 1.7% to $1.0569 on Thursday, pressured by below-forecast retail sales, as well as the broader pullback in assets perceived as risky.
Sterling GBPUSD +0.23% traded at $1.6406, up from $1.6389, and the dollar bought 80.24 Japanese yen USDYEN -0.0125% , compared to ¥80.18 in the previous session.
