By William L. Watts and Sarah Turner, MarketWatch
FRANKFURT (MarketWatch) — The dollar faded versus major rivals Friday, as traders looked ahead to August nonfarm payrolls and other U.S. employment data, while the euro moved to its highest level versus the U.S. currency since June.
The ICE dollar index DXY -0.39% , which measures the greenback against a basket of six other currencies, traded at 80.824, down from 81.089 in late North American trading Thursday.
Economists’ estimates for U.S. jobs growth were revised higher on Thursday after a better-than-expected reading on private-sector payrolls and a bigger-than-expected drop in U.S. jobless claims. Read more on ADP data .
They now expect on average that the U.S. economy added 125,000 jobs in August. Read preview on jobs report .
Stronger U.S. employment data would likely reduce the need for the Federal Reserve to launch a third major bond-buying program soon, strategists said, while a weaker-than-expected figure could fuel the debate over the potential for added monetary stimulus.
“Lingering QE [quantitative easing] expectations makes this last release of the payroll report before next week’s [Federal Reserve policy meeting] quite crucial. A number out of line with consensus could reshuffle market positioning, especially if it surprises on the positive side, since a weak number will mostly reinforce easing expectations,” said Olivier Korber, strategist at Société Générale.
The euro EURUSD +0.5879% pushed above the $1.27 level for the first time since June and traded in recent action at $1.27048, up from $1.2640 late Thursday. The euro rose Thursday after European Central Bank President Mario Draghi detailed a plan to buy an unlimited amount of euro-zone government bonds.
“The fireworks were yesterday,” said Michael Turner, strategist at RBC.
The British pound GBPUSD +0.0736% traded at $1.5924, little changed from $1.5926 late the previous day.
Against the Japanese yen USDJPY +0.0348% , the dollar bought ¥78.89, little changed from ¥78.91 late the previous day, when the dollar jumped by the most in three weeks against the Japanese currency.
The Australian dollar AUDUSD +0.6125% traded at $1.0344, rising from $1.0287.
While Australia’s July trade deficit was worse than expected, Turner at RBC said that ‘it was consistent with the poor trade data throughout the Asia-Pacific region in July.” Read more on Australian trade data .
Turner said that an announcement of new infrastructure plans from China “and the usual pre-data chatter of monetary easing … has lent some support to the Australian dollar.” Read more on China stimulus .
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt.
Sarah Turner is MarketWatch's bureau chief in Sydney.
