Home Forex News Dollar Down, Feels Pressure Over Positive U.S. Employment Data

Dollar Down, Feels Pressure Over Positive U.S. Employment Data

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imageForex1 hour ago (May 07, 2021 12:50AM ET)

(C) Reuters.

By Gina Lee

Investing.com – The dollar was down on Friday morning in Asia, as positive U.S. economic data, and an improving outlook for the economic recovery from COVID-19, exerted pressure on the U.S. currency.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.09% to 90.858 by 12:40 PM ET (4:40 AM GMT).

The USD/JPY pair inched down 0.01% to 109.06, with Japan’s April’s services Purchasing Managers Index (PMI) coming in at a better-than-expected 49.5.

The AUD/USD pair inched down 0.04% to 0.7775 and the NZD/USD pair inched down 0.03% to 0.7230.

The USD/CNY pair inched down 0.01% to 6.4592, with the yuan near a two-month high. China also released positive data earlier in the day, with the Caixin Services PMI for April at a better-than-expected 56.3. April’s trade data was also better than expected, with exports growing 32.3% year-on-year, imports growing 43.1% year-on-year and the trade balance at $42.86 billion.

The GBP/USD pair edged up 0.17% to 1.3908. The U.K.’s Bank of England (BOE) kept its interest rate unchanged at 0.10% as it handed down its policy decision on Thursday. Although the central bank also slowed the pace of its trillion-dollar bond-purchasing program, the slowdown was widely expected and is not an indication that BOE will reverse stimulus measures.

However, uncertainties over the results of a Scottish election that could trigger afresh independence capped gains for the pound.

In the U.S., the number of initial jobless claims fell to 498,000, the lowest since mid-March 2020 when COVID-19 was declared a pandemic. Investors now await April’s employment report, including non-farm payrolls, later in the day.

With the forecast likely to affirm the U.S.’ solid path towards recovery, runaway inflation concerns are also mounting. However, most U.S. Federal Reserve officials, Chairman Jerome Powell included, have maintained a dovish monetary policy so far and are expected to keep doing so.

“Markets are convinced that the Fed won’t take action until the U.S. sees full employment. That means a positive environment for risk assets such as stocks,” State Street (NYSE:STT) Tokyo Branch Manager Bart Wakabayashi told Reuters.

“I often hear people say they are fine with the idea of selling the dollar. The question is becoming, what you should buy against the dollar?” he added.

A possible answer is the Canadian dollar, which gained almost 1% during the previous session to a three-and-a-half-year high.

On the cryptocurrency front, ether hit a fresh record high of $3,610.04 and was last trading at $3,473.51. Bitcoin fetched $56,541, still within the $53,000 to $59,000 range that it has been stuck in during the past week.

Dollar Down, Feels Pressure Over Positive U.S. Employment Data

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