Investing.com – The US dollar rose marginally on Friday, with traders expressing some caution ahead of the highly anticipated monthly jobs report, while the euro continued to show weakness.
At 05:00 ET (10:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.1% higher at 105.827, near a three-week low after falling from 0 .6% overnight.
Payrolls can determine the direction of the dollar
Dollar bulls have been partially restrained this week, pointing to a weakening labor market on a weekly basis, suggesting the Federal Reserve has room to cut rates further.
However, Fed Chairman Jerome Powell indicated in a speech earlier this week that the US economy is now stronger than the central bank expected in September when it started cutting interest rates.
The market still expects a rate cut in December, but the official jobs report, due later in the session, could change course.
Forecasts center on an increase of about 200,000 jobs in November, a recovery from October’s paltry hurricane-affected 12,000 jobs, while seeing the increase from 4.1% to 4.2%.
“The market is long the dollar after two months of a Trump-driven rally. Investors are happy with the dollar story through 2025, but the question is whether they will have to endure a position-led shakeout first. Today poses a risk to those positions in the form of the November jobs report,” ING analysts said in a note.
Euro hit by weak German data
In Europe, yields fell 0.1% to 1.0575, with the common currency hit by data showing it fell unexpectedly in October, pointing to further weakness in the dominant eurozone economy.
Output fell 1.0% in October from the previous month, following an upwardly revised 2.0% decline in September and a 2.6% increase in August.
“This means that the industrial economy is still in recession,” the German Economics Ministry said in a statement.
The economy as a whole grew 0.4% quarter on quarter in the third quarter, data showed earlier Friday, an annual gain of 0.9%.
This lackluster growth points to another rate cut by the European Central Bank next week, and the market is pricing in an easing of more than 150 basis points by the end of 2025.
At the same time, traders should expect more French political unrest after Prime Minister Michel Barnier lost a no-confidence vote earlier this week, with President Emmanuel Macron poised to quickly install a new prime minister.
The fall of the government has left France without a clear path to reducing its budget deficit, credit rating agency Standard & Poor’s said on Thursday.
“With less than four weeks until the end of the year and even less time until the December 21 deadline to pass the budget, regardless of whether a new government is formed, S&P Global Ratings believes that the likelihood of a revised budget for 2025 The plan to be adopted by the end of 2024 is low,” the report said.
traded 0.1% higher at 1.2763, with sterling helped by data showing UK house prices rose for a fifth straight month in November, pointing to a recovering economy.
Mortgage lender said prices rose 1.3% during the month, which is the biggest increase so far this year, pushing the annual growth rate to 4.8%, the strongest level since November 2022.
Asian currency muted
In Asia, most currencies were dovish on Friday ahead of key US jobs data.
rose 0.3% to 150.57, rose 0.2% to 7.2709 and fell 0.4% to 0.6426.
rose 0.5% to 1,419.96, with the pair expected to rise 1.8% this week, the biggest weekly gain since early April, following President Yoon Suk-Yeol’s failed attempt to impose martial law impose on the country.
fell marginally to 84,680 after interest rates remained unchanged, as expected on Friday, but lowered the required cash reserve ratio for local banks.
The central bank also lowered its economic growth projection for the current fiscal year and increased its inflation estimate.
