The U.S. dollar dipped slightly in early European trade on Friday ahead of the critical U.S. employment data. However, it is still on track to post a weekly gain following the hawkish tone of Federal Reserve Chair Jerome Powell.
The Dollar Index, which measures the dollar’s value against a basket of six other currencies, was down 0.2% at 112.625 as of 03:55 ET (07:55 GMT), retreating from the almost two-week high of 113.15 achieved yesterday. Nevertheless, the index should post its biggest weekly advance since September, at just under 2%. When Powell said earlier this week that it was “extremely early” to speculate when the Fed may suspend its rises following another 75 basis-point raise, he shattered hopes that the U.S. central bank would soon start slowing the pace of its increases.
How Are the Traders Reacting?
As a result, traders have curbed some of these gains before releasing crucial American employment statistics later on Friday. Economists anticipate that nonfarm payrolls expanded by 200,000 jobs in October. Data showing a still-healthier job market would guarantee another significant interest rate increase in December. The pair recovered somewhat after falling overnight to its lowest point in almost two weeks, rising 0.1% to 0.9758.
The statistics released on Friday revealed that German industrial orders decreased by 4.0% every month in September, their sixth decline in the previous seven months and their greatest decline since March, making these improvements quite shaky.
This means that Germany, the largest economy and a key development engine in the Eurozone, is inching closer to a recession. Services and the final composite Later in the day, the region’s PMI statistics are forthcoming; both sectors will be firmly in the contraction zone. The Bank of England increased interest rates by 75 basis points, the greatest rise since 1989, although the GBP/USD exchange rate increased by 0.5% to 1.1224, reversing the previous session’s losses.
Despite a modest decline in early European trade on Friday before the crucial U.S. jobs report, the U.S. dollar is still expected to end the week up after Federal Reserve Chair Jerome Powell’s aggressive comments.
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