Dollar struggles on weak US data

Dhaka,  Fri,  18 August 2017
Published : 04 Aug 2017, 14:47:20
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Dollar wallows near 15-month lows as US jobs report eyed

Reuters
The dollar struggled near its lowest since May 2016 against a basket of currencies on Friday in the wake of weak US data, as traders awaited the key non-farm payrolls report due later in the session for potential relief.

The ailing greenback has come under pressure this week from fresh political turmoil in Washington, as well as largely poor US economic data, which have added to uncertainty about the pace of future Federal Reserve policy tightening.

Markets were provided with more worrying signs -- both economic and political -- late on Thursday.

Data showed a much sharper-than-expected slowdown in growth in the US services sector, which hit an 11-month low. Meanwhile, news broke that a grand jury will investigate allegations of Russian meddling in November's US election.

The dollar index .DXY, which has just recorded its worst run of monthly losses since early 2011, was 0.1 per cent lower at 92.766 .DXY, poised to lose about 0.6 per cent during a week in which it fell to a 15-month low of 92.548.

"It is becoming increasingly clear that the greenback is... suffering as a result of President Trump's weak government -- the situation in the White House is simply too chaotic," wrote Commerzbank strategists in a note to clients.

"That means any hopes that arose after the elections and resulted in a sharp rise in inflation expectations have since been dashed."

The greenback had risen to 14-year highs in the two months after Donald Trump was elected US president, on the view that his policies would boost growth and inflation. But it has since tumbled more than 10 per cent, as worries over Trump's ability to govern have pressured the currency.

Beleaguered dollar bulls looked to the US jobs report due at 12:30 GMT to turn its fortunes around, at least in the short term. Economists polled by Reuters expect US employers to have added 183,000 jobs in July.

The greenback has also suffered at the hands of a strengthening euro, which hit 2-1/2-year highs this week, boosted by dollar weakness but also the view that the European Central Bank is set to tighten policy amid a brightening economic picture.

The euro added 0.1 per cent on Friday to $1.1879, within striking distance of $1.1910, its highest since January 2015, scaled midweek.

Against the yen, the dollar hit a seven-week low in Asian trading, before steading to trade flat at 110.10 yen.
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