Gertrude Chavez-Dreyfus and Harry Robertson
NEW YORK/LONDON (Reuters) – The U.S. dollar rose on Tuesday after falling overnight to its weakest level against the euro, pound sterling and Swiss franc since mid-March as investors consolidated gains in other currencies ahead of a key jobs report in non-farm sector later this week. .
However, the dollar pared gains against a basket of currencies led by the euro and extended losses against the yen after U.S. job openings fell more than expected in April to their lowest level in more than three years, according to jobs survey data. and labor turnover. or JOLTS report.
Job openings, a measure of labor demand, fell by 296,000 to 8.059 million on the last day of April, the lowest level since February 2021.
Market participants are focusing on JOLTS data ahead of Friday’s US jobs report, which is expected to show 185,000 new jobs created in May, up from 175,000 in April.
The JOLTS report follows data on Monday that showed a second straight month of slowing manufacturing activity and an unexpected decline in construction spending.
“Although the US dollar initially fell on the JOLTS data, it already appears to be regaining ground and is still on track for a daily gain after yesterday’s fall,” said Helen Given, currency trader at Monex USA in Washington.
“The Federal Reserve has long said that it expects some easing in the labor market, and today’s JOLTS numbers are a good indication that the labor market may finally be moving in the direction they want, so although fewer “In the grand scheme of things, that’s definitely a good thing, and the Federal Reserve might be happy to see that,” she added.
On the other hand, US industrial orders rose for the third month in a row in April, helped by demand for transportation equipment. The data showed factory orders rose 0.7%, in line with March’s revised pace. Economists polled by Reuters had forecast growth of 0.6% from March.
Quotes rose 0.2% to 104.25 in morning trading, having fallen overnight to their lowest level since mid-April at 103.99.
The euro, the dollar index’s largest component, fell 0.3% to $1.0868.
YEN RISES TO THREE WEEK HIGH
The yen, on the other hand, rose to a three-week peak against the US dollar as Bank of Japan officials warned they were keeping a close eye on the currency and a Bloomberg report said they could soon discuss cutting bond purchases.
Bank of Japan Deputy Governor Ryozo Himino said on Tuesday the central bank must be “very vigilant” about the impact of yen movements on inflation when setting monetary policy.
Bloomberg reported that the Bank of Japan will consider slowing bond purchases at its two-day policy meeting next week. That could push yields higher in the coming weeks and could come before an interest rate hike in July, which TD Securities analysts said they now expect on Tuesday.
Alex Lu, currency and macro strategist at TD Securities in Singapore, said investors were also likely to unwind carry trades given Monday’s losses in the Indian rupee and Mexican peso following recent election results.
In carry trades, investors borrow in low-yielding currencies such as the yen or Swiss franc to buy higher-yielding currencies such as emerging market currencies.
“As such, the Japanese yen and Swiss franc are showing significant gains during today’s trading session,” Loo said.
The Mexican peso was still down against the dollar that day, but not as much as on Tuesday, when it lost more than 4%. The dollar was last up 0.8% at 17.805.
The Indian rupee remained lower against the US dollar, which was last trading 0.5% at 83.539 rupees amid a lack of clarity over the performance of the alliance led by Indian Prime Minister Narendra Modi after it lost its overall majority.
In Britain, sterling also hit its highest since mid-March at $1.2818 before falling 0.3% lower to $1.2777.
Against the Swiss franc, the dollar also fell to its lowest level since March at 0.8971 francs. It was last down 0.5% at 0.8989 francs. Swiss inflation remained stable at 1.4% year on year in May, the data showed.
Currency markets were also weighed down by falling oil prices as investors worried about year-end supply growth amid signs of weaker U.S. demand.
The Australian dollar fell 0.7% against the greenback to US$0.6642 and the Norwegian crown fell 1.4% against the dollar to 10.5778, a sign that commodity currencies are under pressure.