By Peter Nurse
Investing.com -- The dollar edged lower Tuesday in tight trading ranges, with traders reluctant to take strong positions ahead of the release of key U.S. employment data at the end of the week.
At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded marginally lower at 92.028.
USD/JPY dropped 0.1% to 109.14, near to the mid-July low of 109.07, GBP/USD gained 0.1% to 1.3891 and EUR/USD traded 0.1% higher at 1.1875.
The dollar has trended lower since Federal Reserve Chairman Jerome Powell indicated last week that interest rate increases were still a long way away, falling to a low of 91.775 on Friday, the weakest since June 28.
An Institute for Supply Management report on Monday showed July U.S. manufacturing growth slowed for the second straight month, a release that played into Powell’s belief that more economic progress was needed before the central bank started tapering its huge bond-buying program.
Economic data later Tuesday centers around June factory orders, which are forecast to grow 1.0% on the month, slowing from 1.7% growth the previous month.
But all eyes will be on Friday’s official jobs report which will provide some indications of how sustained the U.S. recovery has been in July. Economists are looking for an increase of 900,000 jobs, which would be the biggest increase for 11 months.
Elsewhere, AUD/USD rose 0.5% to 0.7399 after the Reserve Bank of Australia surprised the market by keeping to its plan to taper its bond purchases even with Covid-related lockdowns in a number of cities likely to derail the country’s economic recovery.
Many traders had expected the central bank to reverse its tapering plan given the new wave of Covid-19 cases, but this move shows an underlying confidence that the economy will bounce back quickly once restrictions are removed.
USD/TRY rose 0.3% to 8.3680 ahead of the release of the latest Turkish inflation data, which could influence the interest rate decisions of the central bank.
Inflation is likely to climb to an annual 18.6% in July, up from 17.5% in June, according to a survey of analysts by Bloomberg, which would likely reduce the chances of an interest-rate cut in the near future.