FOREX-Dollar wobbles after manufacturing miss as traders look to payrolls

Published 04/05/2021, 02:20
Updated 04/05/2021, 02:24
© Reuters.
AUD/USD
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NZD/USD
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US10YT=X
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* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Tom Westbrook
SINGAPORE, May 4 (Reuters) - The dollar nursed losses on
Tuesday after an unexpected slowdown in U.S. manufacturing
growth prompted investors to trim bets that a booming U.S.
economy could boost the greenback.
Data showed shortages of basic materials and transport
snarls depressed the Institute for Supply Management
manufacturing survey by 4.7 points to 64.7, toppling the dollar
from a three-week peak on the yen and a two-week high on the
euro. With Asia trade thinned by holidays in Japan and China,
further moves were muted, leaving the dollar to drift up
slightly off overnight levels to sit at 109.14 yen JPY=EBS and
at $1.2054 per euro EUR=EBS .
The common currency rose 0.3% overnight and found additional
support from a surge in German retail sales and record-high euro
zone factory activity.
The Australian AUD= and New Zealand NZD= dollars edged a
fraction lower on Tuesday after bouncing overnight, while the
U.S. dollar index =USD against a basket of key rivals tacked
on 0.05% to 91.036.
Traders' focus is now on services figures due on Wednesday
and payrolls data on Friday and markets seem finely balanced.
Some analysts say strong figures might boost the dollar by
bringing forward expectations for higher interest rates, while
others argue that a strong U.S. economy would weigh on the
currency as imports gain and the trade deficit grows.
"The ISM manufacturing report did not live up to
expectations but payrolls should be at least as strong as
consensus expectations," Westpac analysts said in a note.
"The Fed's dovish influential core won't have any of it, but
expectations for solid U.S. data this week and likely more
hawkish regional Fedspeak leave the dollar index positioned for
more two-way price action."
Benchmark ten-year U.S. Treasury yields US10YT=RR fell 2.5
basis points on Monday following the ISM miss and as New York
Fed President John Williams reiterated that the recovery so far
is "not nearly enough" to prompt monetary policy tightening.
Also on the horizon are central bank meetings in Britain and
Norway, and the Reserve Bank of Australia's policy outcome at
0430 GMT.
No changes are expected from the RBA although the tone of
the statement might provide hints on whether the bank will
upgrade economic forecasts it is due to publish on Friday.
The Australian dollar was 0.1% weaker in morning trade at
$0.7756, and the kiwi a tad softer at $0.7194. AUD/
Sterling was perched near a week-high on the euro EURGBP=
and had overnight punched through its 20-day moving average
against the dollar to sit at $1.3905 as traders reckon the Bank
of England may announce a slowdown of its bond purchases at its
Thursday meeting. Elsewhere cryptocurrency ether ETH= extended its record
run, zooming to a new record peak of $3,457.64 before pulling
back a fraction. Currency bid prices at 058 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.2055 $1.2063 -0.06% -1.33% +1.2063 +1.2053
Dollar/Yen JPY=EBS 109.0900 109.0750 +0.01% +5.62% +109.1700 +109.0700
Euro/Yen S>
Dollar/Swiss CHF=EBS 0.9120 0.9113 +0.05% +3.06% +0.9121 +0.9118
Sterling/Dollar GBP=D3 1.3899 1.3909 -0.03% +1.78% +1.3908 +1.3894
Dollar/Canadian CAD=D3 1.2283 1.2278 +0.06% -3.52% +1.2287 +1.2276
Aussie/Dollar AUD=D3 0.7754 0.7764 -0.15% +0.77% +0.7763 +0.7748
NZ NZD=D3 0.7192 0.7200 -0.11% +0.15% +0.7202 +0.7188
Dollar/Dollar


All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX


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