Dollar edges higher ahead of payrolls; sterling slips after CPI
The U.S. dollar edged higher Wednesday, with this safe haven helped by the fragile nature of global confidence, although gains are limited ahead of the release of the much-anticipated delayed U.S. jobs report.
At 04:15 ET (09:15 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher to 99.552, close to a one-week high.
Dollar helped by risk-off stance
Global equity markets have been hit hard this week amid concerns about valuations of artificial intelligence-linked stocks, and this has seen demand for U.S. Treasury bonds and thus the dollar.
Investors remain very nervous, and the release of Nvidia’s results after the close is likely to drive sentiment over the near term given its importance in the AI trade.
“The magnificent seven tech stocks are around 7% off their highs – a drop in the ocean compared to the 70% rally since April. But the understandable fear is that this is a very crowded trade and that a casual walk to the exit could turn into something less orderly should cause be found,” said analysts at ING, in a note.
Adding to the concerns are signs of an economic slowdown, with initial jobless claims data on Tuesday showing the number of Americans on jobless benefits surged between mid-September and mid-October.
The September U.S. nonfarm payrolls report, postponed due to last month’s government shutdown, is scheduled for release on Thursday.
Sterling slips after CPI drop
In Europe, EUR/USD edged marginally lower to 1.1577, trading near a one-week low.
The final reading of the eurozone consumer price index is due later in the session, and is expected to show that inflation slipped slightly in October, suggesting the European Central Bank will keep interest rates on hold at its next meeting in December.
“Expect continued narrow ranges for EUR/USD, but a move sub 1.1560/65 could cause some intraday trouble,” said ING.
GBP/USD traded 0.1% lower to 1.3136, after the U.K. annual inflation rate fell in October, increasing the likelihood that the Bank of England will cut interest rates at its final policy meeting next month.
Annual consumer price inflation rose 3.6% in October, a drop from 3.8% the prior month, the lowest level it has been since May.
“ We expect sterling to remain fragile heading into the Budget,” ING said.
Chancellor Rachel Reeves is expected to need to raise tens of billions of pounds to stay on track to meet her fiscal targets at her budget on Nov. 26.
Yen near nine-month low
In Asia, USD/JPY gained 0.1% to 155.67, with the pair reaching a nine-month high in the previous session.
Source: Reuters.com
