Investing.com – The US dollar fell slightly on Thursday ahead of the release of more important labor market data, while the euro rose slightly despite French political unrest.
At 05:20 ET (10:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.1% lower at 106.180.
The dollar gives back some gains
The dollar has given up some of its recent gains after slower-than-expected monthly growth, while services sector activity declined in November after gains in recent months.
Federal Reserve Chairman Jerome Powell indicated that the U.S. economy is now stronger than the central bank expected in September when it began cutting rates, indicating that rate cuts are on the horizon.
The market still expects a rate cut in December, but weekly data later in the session and, importantly, Friday’s could help guide expectations about future interest rate movements.
“Weekly initial unemployment claims have remained very low recently, but tomorrow’s NFP jobs data will have a much bigger impact on the dollar,” ING analysts said in a note.
The euro is rebounding despite the French political crisis
In Europe, yields rose 0.2% to 1.0532, moving away from a two-year low of 1.0331 in late November, even as French Prime Minister Michel Barnier was set to resign after a vote of no confidence on Wednesday had lost.
This could result in a delay in fiscal discipline in the eurozone’s second-largest economy, but the country’s massive budget deficit will have to be addressed at some point.
At the same time, data released earlier Thursday showed Germany fell 1.5% in October, while also declining on a month-on-month basis, suggesting weak growth ahead.
Rates are widely expected to be cut next week, with the market pricing in more than 150 basis points of easing by the end of 2025.
“We are still convinced that short-term resistance at 1.0550 could be the extent of the EUR/USD recovery and we see a scenario that EUR/USD remains near 1.0500 in the coming days fluctuate,” said ING, “as there appears to be more than 1.0500. $5 billion of 1.0500 FX options at that level expire next week.”
traded 0.2% higher at 1.2721, helped by Britain rising more than expected in November.
Retreats won again
In Asia, the index fell 0.2% to 150.25, fell 0.1% to 7.2709 and rose 0.2% to 0.6440.
rose 0.5% to 1,417.55 after the pair climbed to a two-year high on Wednesday after South Korean President Yoon Suk-Yeol abruptly revoked an imposition of martial law amid public and political anger.
South Korea’s Finance Ministry has announced a 40 trillion won ($28.35 billion) market stabilization fund. The Bank of Korea could buy bonds and expand repo operations, with authorities prepared to act if necessary under contingency plans.
