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01/07/24
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USD Lower Before Payrolls Data
On Monday in early European trade, the U.S. dollar dropped lower before the week’s crucial employment report.
The U.S. dollar index, which measures its strength against 6 other major currencies, traded 0.3% down at 105.255, about a one-week low.
The dollar index was hit by the euro’s strength, as the single currency carries the biggest weight in the basket, although it was already on the back foot after the release of lower-than-expected inflation data on Friday.
The personal consumption expenditures (PCE) index, the Federal Reserve’s preferred inflation measure, on Friday showed inflation was cooling, fueling expectations that the central bank may start reducing interest rates later in the year.
The focus this week will mainly be on the nonfarm payrolls report on Friday as traders seek new indications on when the Fed may begin to reduce interest rates.
Economists are forecasting the U.S. economy will have in June added 189K jobs after a bigger than forecast rise of 272K jobs in May.
Before the nonfarm payrolls data, a report on Tuesday will likely show that job openings in May dropped again. The minutes of the Fed’s June meeting will be released on Wednesday, and Fed Chair Jerome Powell will appear at the ECB’s annual forum in Portugal.
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