FOREX-Dollar recovery loses steam in wait for strong clues on rates, economy

  • 8/5/2021
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(New throughout, updates prices, market activity and comments; new byline, changes dateline, previous LONDON) * Dollar down less than 0.1% * Sterling rises 0.3% after BoE comments seen as more hawkish * Euro up slightly * Ether dips and rises after activation of network change By David Henry and Ritvik Carvalho NEW YORK/LONDON, Aug 5 (Reuters) - The dollar took a breather on Thursday morning, waiting for new direction from Friday"s U.S. jobs report after a boost the day before from seemingly hawkish comments by a top Federal Reserve official. The dollar index against major currencies was down 0.1% to 92.189 at midmorning in New York. The greenback, which gained 0.2% on Wednesday, was trading in a relatively tight range, unmoved by new government reports on jobless claims and the trade deficit that came in close to estimates from economists. U.S. Treasuries were little changed, too, with the yield on the 10-year note last at 1.2052%. "The market has been in a wait-and-see mode until we get past tomorrow"s nonfarm payroll report," said Ed Moya, senior market analyst at broker OANDA. Friday"s employment report for U.S. employment in July is seen as highly uncertain but critical to Fed policymakers deciding when to begin tapering support for the economy. "If we get an impressive read tomorrow, that would have the market firmly pricing in tapering and allow the yield curve to steepen and provide the dollar with support," Moya said. According to a Reuters survey of economists, nonfarm payrolls likely increased by 880,000 jobs in July, up from 850,000 in June. Economists have warned that the spread of the Delta variant of the coronavirus and mixed readings from labor market indicators make estimates for July troublesome. The British pound was up 0.3% to $1.3931 at 10:12 a.m ET (1412 GMT) after the Bank of England kept the size of its bond-buying programme unchanged and held its benchmark interest rate at a historic low of 0.1%. The central bank said it would start reducing its stock of bonds when its policy rate reaches 0.5% by not reinvesting proceeds and that it would consider actively selling down holdings when the rate reaches at least 1%. "The undertones of today’s policy statement and monetary policy report (MPR) are much more hawkish than initially expected," said Simon Harvey, senior FX analyst at Monex Europe. The euro edged up less than 0.1% to $1.1845. Against the yen, the dollar rose 0.2% to 109.72. On Wednesday, Fed Vice Chair Richard Clarida said conditions for an interest rate hike could be met in late 2022, setting the stage for a move in early 2023. "Clarida’s comments are allowing the dollar to stay well supported into the payrolls numbers on Friday," said ING FX strategists Francesco Pesole and Chris Turner. Clarida"s comments led investors to price in slightly higher chances of a hike in late 2022/early 2023 and to a flattening of the Treasury yield curve as short-term yields rose. Such a move would likely precede any tightening by the European Central Bank, which is battling to get inflation near its target. Ether, the second-largest cryptocurrency, was up 2% to $2,788 after an initial dip when the Ethereum blockchain network activated a technical change that was to take some tokens out of circulation. Bitcoin declined 3% to $38,401. ======================================================== Currency bid prices at 10:12AM (1412 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index 92.1890 92.2810 -0.09% 2.454% +92.3520 +92.1130 Euro/Dollar $1.1845 $1.1837 +0.06% -3.06% +$1.1857 +$1.1829 Dollar/Yen 109.7200 109.4900 +0.21% +6.19% +109.7750 +109.4050 Euro/Yen 129.95 129.57 +0.29% +2.39% +129.9900 +129.5800 Dollar/Swiss 0.9063 0.9065 -0.02% +2.44% +0.9077 +0.9052 Sterling/Dollar $1.3931 $1.3891 +0.29% +1.97% +$1.3946 +$1.3873 Dollar/Canadian 1.2490 1.2542 -0.40% -1.90% +1.2547 +1.2481 Aussie/Dollar $0.7403 $0.7382 +0.30% -3.75% +$0.7414 +$0.7377 Euro/Swiss 1.0732 1.0728 +0.04% -0.69% +1.0741 +1.0721 Euro/Sterling 0.8500 0.8521 -0.25% -4.89% +0.8528 +0.8496 NZ $0.7060 $0.7044 +0.22% -1.70% +$0.7073 +$0.7039 Dollar/Dollar Dollar/Norway 8.8080 8.8465 -0.37% +2.64% +8.8495 +8.8135 Euro/Norway 10.4340 10.4555 -0.36% -0.31% +10.4763 +10.4293 Dollar/Sweden 8.6068 8.6095 +0.08% +5.01% +8.6183 +8.5995 Euro/Sweden 10.1954 10.1870 +0.08% +1.18% +10.2035 +10.1820 (Reporting by David Henry in New York and Ritvik Carvalho in London; additional reporting by Wayne Cole in Sydney; editing by Barbara Lewis and Jonathan Oatis) Our Standards: The Thomson Reuters Trust Principles.

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