© Reuters.
Investing.com – The U.S. dollar fell in early European hours on Friday, but is still on track for small gains this week after strong employment data, with the monthly jobs report still to come out, raised the possibility of a longer Fed hike. rates.
At 03:55 ET (07:55 GMT), which measures the greenback against a basket of six other currencies, it was trading down 0.2% at 102.710 but still on track to post slight gains this week after surging above 103 within previous session.
Nonfarm payroll due at a later date
Data released Thursday showed a rise in June in the largest rise since February 2022, while the number of Americans filing for unemployment benefits rose moderately last week.
These data releases indicate the resilience of the labor market, which has been able to withstand a year-long strict tightening cycle, indicating that interest rates can continue to be raised to fully capture the highest rates.
In addition, the Treasury yield, which usually reflects near-term interest rate expectations, was trading near 5%, after jumping to a 16-year high of 5.12% on Thursday.
Focus will now turn to the widely watched monthly Nonfarm Payrolls release, for more clues to the intentions of Fed policymakers later this month.
This is expected to show an increase of 225,000 jobs last month after a rise of 339,000 in May and 294,000 in April.
Weak German industrial production
It fell to 1.0886 after falling 0.2% in May, indicating the continued suffering of the industrial sector in the eurozone’s largest economy and manufacturing powerhouse.
However, the report suggested that another rate hike later this month is practically a done deal as it struggles to move up.
“We suspect the pair faces some downside risks in the latter part of the year after the FOMC meeting minutes set the data cap to convince markets to cut interest rate hikes by the Fed,” ING analysts said in a note.
Demand for the yen as a safe haven
It fell 0.4% to 143.47, with safe-haven demand for the yen after strong US labor data pointing to more aggressive tightening, weighing on global growth expectations and that risk appetite.
Elsewhere, it fell to 1.2738, retreating from a two-week high of 1.2780 on Thursday, while also poised to hike interest rates as the UK remains the highest in the developed world.
It rose 0.1% to 0.6628, while it fell 0.1% to 7.2446, with the yuan boosted by a series of aggressive midpoint reforms by the People’s Bank of China.
