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FOREX-Dollar steady before U.S. jobs data; EM currency index hits record high

ForexMay 07, 2021 13:36
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* Dollar index at one-week low
* Sterling up 0.2% vs dollar
* MSCI EM currency index hits record high
* Graphic: World FX rates

(Updates prices, adds commentary)
By Elizabeth Howcroft
LONDON, May 7 (Reuters) - The dollar was stuck around a
one-week low on Friday, under pressure ahead of U.S. jobs data
that is expected to point to a strong post-pandemic economic
recovery in the United States and to increase investor risk
Against a basket of major currencies, the dollar index was
at 90.837, down less than 0.1% on the day at 1054 GMT =USD . It
was on track for a loss of around 0.5% on the week overall,
having seen its worst day in nearly two weeks on Thursday.
U.S. payrolls data is due at 1230 GMT and is expected to
show that employers hired nearly a million workers in April, as
they rushed to meet a surge in demand unleashed by the reopening
of the economy and massive financial help from the government.
In the previous session, a larger-than-expected fall in
jobless claims saw stocks rise and the dollar fall, suggesting
that the dollar is acting as a safe-haven currency, hurt by
improving risk appetite. But if improving economic data stokes inflation worries and
leads to expectations that the Federal Reserve will reduce
monetary stimulus, that could boost U.S. yields and the dollar.
"If the dollar's going to find another leg of support under
this reflationary dynamic, the U.S. jobs data has to be
substantially above expectations, which are already quite high",
said Simon Harvey, FX analyst at Monex Europe.
"For us there's a big event risk this afternoon that we're
going to see the data actually underperform what markets are
expecting and we could see a dollar unwind".
Commerzbank strategist You-Na Park-Heger said that the
dollar could benefit in the short-term from the data but that
the labour market report would not set the longer-term trend for
euro-dollar because the Fed would need to see more positive
economic data before taking any action.
At 1059 GMT, the euro was up 0.1% on the day at $1.20715
The British pound was a touch stronger against the dollar at
$1.3912 GBP=D3 and steady against the euro at 86.765 pence per
euro EURGBP=D3 .
The Bank of England said on Thursday that Britain's economy
would grow by the most since World War Two this year and slowed
the pace of its trillion dollar bond-purchasing programme but
stressed it was not reversing its stimulus. China's exports unexpectedly accelerated in April and import
growth hit a decade high, helping to push the yuan and Asian
stocks higher. China's yuan was at a more than two-month high versus the
dollar, set for its longest weekly winning streak since
September, helped by the strong trade data and softer dollar.
The MSCI emerging market currency index hit a record high of
1732.79 on Friday, lifted by gains in the Chinese yuan. Monex
Europe's Harvey said that emerging market currencies were also
benefiting from the "commodity supercycle".
"We expect the likes of AUD, CAD and NOK to remain well
supported with the backdrop for positive optimism over global
growth still quite favourable", wrote MUFG head of research
Derek Halpenny in a note.
The Canadian dollar was down 0.2%, having surged on Thursday
to its strongest in more than three years against the U.S.
dollar CAD=D3 . "There could be some profit-taking on today's Canadian
employment data, which is expected to be bad," Marshall Gittler,
head of investment research at BDSwiss Group, said in a note.
The Australian dollar was down 0.1% versus the U.S. dollar,
at 0.77735 AUD=D3 .
The Aussie has been supported by a strong rally in the
prices of Australia's top export earner, iron ore. Elsewhere, the cryptocurrency ether slipped 1%, having hit a
all-time high on Thursday ETH=BTSP . Bitcoin was little changed, at around $56,440 BTC=BTSP .

World FX rates

FOREX-Dollar steady before U.S. jobs data; EM currency index hits record high

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