Investing.com – The U.S. dollar was trading little changed in early European trade on Friday as traders awaited key U.S. employment data while the euro steadied following a historic rate cut by the European Central Bank.
At 05:00 ET (0900 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was unchanged at 104.060.
Dollar awaits monthly employment report
The dollar fell this week, with the index down 0.5% this week as softening labor market conditions in the United States strengthened the case for the Fed to cut rates this year.
Weekly jobless claims on Thursday were slightly higher than last week’s upwardly revised 221,000, bolstering market calls this week that labor market tensions are easing.
Next up is the long-awaited monthly issue.
The world’s largest economy is expected to add 185,000 jobs last month, up slightly from April’s 175,000 and the smallest gain in six months. The index is expected to remain below 4% for the 28th straight month.
The jobs report could prove the economy is losing momentum if it shows the slowdown in job creation continues, but a surprise increase could send the dollar higher.
Markets have priced in nearly 50 basis points of Fed rate cuts this year, the first of which is expected in September.
Traders overestimate ECB rate cut
fell 0.1% lower to 1.0884, retreating from a 2.5-month peak of 1.0916 hit earlier in the week as traders price in the European Central Bank’s first reading since 2019.
At the same time, the central bank raised its inflation forecasts, and the president withdrew at a news conference to confirm that he had entered a “tapering” phase of his contractionary monetary policy.
“Lagarde’s comments during the press conference, which pointed out the level of restrictions still needed, the high dependence on data and the fact that one member of the Governing Council was against yesterday’s decision to cut rates, suggest that the ECB has not really made a decision yet. decisions on any issue. next steps,” ING analysts said in a note.
fell slightly to 1.2786, with sterling trading in a tight range ahead of the Bank of England’s next rate setting later this month.
Range of limits for the upcoming Bank of Japan meeting
In Asia, shares traded 0.2% lower at 155.33, with focus on next week’s meeting at which the central bank is expected to begin scaling back bond purchases as it tightens policy.
fell slightly to 7.2428, remaining near a six-month high after the latest China trade data was released.
China’s economy grew faster than expected in May, helped by strong industrial output and overseas demand. This led to the country also recording a larger-than-expected surplus.
However, China’s economic growth rate was much slower than expected, indicating that local demand remained sluggish as the broader economy struggled with an uneven economic recovery.