Dollar little changed ahead of July US jobs report
New York: The dollar took a breather Thursday, avoiding large moves against other major currencies ahead of the July US labor market report.
Thursday`s trade followed Wednesday`s report on second-quarter economic growth and came ahead of Friday`s jobs report for July, making the session "an `eye of the storm` type day," as DailyFX analyst Christopher Vecchio put it.
On Wednesday, the dollar reached an eight-month high against the euro after second-quarter US growth came in at surprisingly robust 4.0 percent. Analysts said the report bolstered confidence the Fed will raise interest rates in 2015.
"While no one expects the Federal Reserve to raise interest rates this year, market expectations for the Fed Funds rate increased significantly over the past 48 hours and this shift has been extremely positive for the greenback," said Kathy Lien, managing director at BK Asset Management.
Lien highlighted the possibility of a "muted" reaction in currency markets to Friday`s jobs report given expectations that there will be a drop-off from the 288,000 jobs added in June.
A relatively weak report would imply a lengthy period between the Fed`s decision to scale down stimulus this fall and a move to hike benchmark interest rates, "weighing on the US dollar," said Ilya Spivak, currency strategist at DailyFX.
The euro, for its part, was pulled in opposite directions by data Thursday. July inflation dropped to 0.4 percent, reviving concerns about deflation.
At the same time, the jobless rate in the 18-nation eurozone fell to 11.5 percent in June from 11.6 percent in May, hitting the lowest level since September 2012.