The U.S. dollar stayed under modest but still pressure on May 7 ahead of an important U.S. jobs report that could strengthen expectations of a strong economic recovery. It could also trigger investor appetite for stocks, higher-yielding currencies, and commodities.
The dollar index against six other main currencies stood near its lowest level so far this week, at 90.868. On Thursday, it declined 0.4%.
As the greenback is softer against many currencies, the euro outperformed many others, having gained 0.5% on May 6 to trade at $1.2063.
The dollar declined against the yen, as it fell to 109.05, almost flat so far on the week.
Oil prices as well as the Bank of Canada’s recent shift to more hawkish guidance helped to boost the Canadian dollar. The Canadian dollar gained almost 1% overnight to a 3-½-year high of C$ 1.21455 and last stood at C$1.2157.
The Chinese yuan is another currency that demonstrated its strength. Yuan held firm near a two-month high, standing at 6.4655 per dollar in offshore trade.
The British pound traded at $1.3896. It was unable to hold on gains made on Thursday after the country’s central bank slowed the pace of its trillion dollar bond-purchasing program. The decision made by the Bank of England was largely expected. The central also mentioned that it was not reversing its stimulus.
The country’s currency could be capped for now by uncertainties regarding the Scottish election that could unleash a showdown with Prime Minister Boris Johnson. He is struggling to deal with problems, even without the independence movement in Scotland. Just over a third of the results will be announced on May 7. The remainder will be announced on May 8.
United States jobs report
U.S. payrolls data due at 12:30 GMT will likely confirm the economy’s robust path to recovery from the pandemic. Economists expect almost one million new jobs for April.
The number of Americans who filed new claims for unemployment benefits dropped below 500,000 last week. The number of new jobless claims fell to the lowest level since the COVID-19 pandemic started in 2020.
Although signs of strong job recovery could trigger inflation worries. To this date, Federal Reserve policymakers preferred to downplay the risk of higher prices. Their position is a sign that stimulus tapering will not be on the agenda in the nearest future.