The U.S. dollar weakened Friday ahead of the January jobs report, as Wall Street awaits affirmation of a newfound bout of weakness in bucks following the Federal Reserve’s dovish policy update on Wednesday.
The ICE U.S. Dollar Index DXY, -0.05% slipped by about 0.1% to 95.503. So far, the gauge, which measures the greenback against a half-dozen currencies, is headed for a weekly loss.
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In U.S. economic data, the jobs report for January is due at 8.30 a.m. Eastern, followed by manufacturing, construction and consumer sentiment numbers at 10 a.m. Eastern.
Following the Fed’s decision more ‘patient’ strategy on rate hikes, a weaker-than-expected jobs report could hurt further hobble the U.S. dollar, market participants said. The dollar index is set for a weekly skid of about 0.3%, according to FactSet data.
“The dollar’s depressed price action this week suggests that bulls are tired and clearly in trouble,” said Lukman Otunuga, research analyst at FXTM. “A disappointing jobs report should place bears back in the driver’s seat with the dollar index seen sinking towards 95. A solid weekly close below the 95 level should encourage a steeper decline towards 94.20.”
In other economic data, China’s Markit/Caixin manufacturing purchasing managers index for Januarycame in lower than expected late Thursday, at 48.3 compared against 49.5 expected. Any number below 50 denotes worsening economic conditions. While China’s official PMIs, reported Wednesday, let market participants fretting over a global downturn breathe a momentary sigh of relief, Friday’s data brought those fears right back in focus.
While Chinese stock indexes finished Friday’s session in the green, the yuan was weaker versus the buck, along with many other emerging-market currencies. One dollar last bought 6.7351 yuanUSDCNY, +0.5194% in Beijing, up 0.5%, and 6.7446 yuan USDCNH, +0.5022% offshore, also up 0.5%.
The latest round of U.S.-China trade talks wrapped up on Thursday in Washington, amid positive comments from President Donald Trump.
The euro EURUSD, +0.2009% was firmly in positive territory, buying $1.1470, up from $1.1449 late Thursday. Flash readings for harmonized eurozone consumer-price inflation came in earlier, showing an increase in core inflation to 1.1% year-over-year, versus 1% expected. Headline CPI, however, was in line with expectations and lower than the prior reading at 1.4%.
The currency block’s manufacturing PMI for January was also in line with consensus forecasts at 50.5.
Despite a lack of new developments on the Brexit front, the British poundGBPUSD, -0.3509% was the worst major currency performer in early trading, dropping to $1.3061