By Laura Matthews and Harry Robertson
NEW YORK/LONDON (Reuters) -The dollar fell against other major currencies on Wednesday after stronger-than-expected U.S. jobs data and a British budget release sparked choppy trading in a market awaiting clues on the future policy paths of their respective currencies . central banks.
US private payroll growth rose sharply in October, overcoming fears of temporary disruptions from hurricanes and strikes, according to the ADP National Employment Report.
Meanwhile, separate data showed the US economy grew at an annual rate of 2.8% in the third quarter, slightly less than the 3% that economists had expected.
The , which measures the coin against six major rivals, rose to 104.43 earlier in the session before losing ground 0.16% to 104.07. It rose to the highest level since July 30 at 104.63 on Tuesday.
“I think the momentum in the U.S. economy still looks pretty good,” said Brad Bechtel, global head of FX at Jefferies in New York.
“Obviously we’re going to have a lot more data with the non-farm payroll figures at the end of this week. But expectations about the Federal Reserve have been pulled back quite a bit from quite extreme levels. I think Friday’s report will indicate how we see the Fed moving forward.”
Mixed US indicators overnight, which showed a softening in the US jobs market but a confident consumer, offered little clarity on the outlook for Federal Reserve interest rates, allowing the dollar to drift lower along with yields on government bonds.
However, recently economic gauges have pointed to a resilient labor market and economy, prompting traders to scale back their bets on interest rate cuts.
Matt Weller, head of market research at StoneX, in Grand Rapids, Michigan, said: “A 25 basis point Fed rate cut after the election seems like a foregone conclusion at this point.” But he warned that a strong NFP report could pave the way for a pause as early as December.
Both dollar and US bond yields have also been boosted in recent days by increasing speculation in markets and some betting platforms about a victory in the November 5 presidential election for Republican candidate Donald Trump – whose tariffs and immigration policies are seen as inflationary – and who opposes Democrat Kamala Harris.
That helped push the cryptocurrency’s Bitcoin surge to near its all-time high at $73,803.25 in March, as Trump has vowed to make the United States “the crypto capital of the planet.”
The token last changed hands at around $72,033, after rising as high as $73,609.88 in the previous session.
British budget
Sterling, which fell as much as 0.6% as British Chancellor of the Exchequer Rachel Reeves presented the Labor government’s first budget, was last up 0.1% at $1.3002.
Government bond yields initially fell during Reeves’ budget but rose later in the session, with 10-year UK government bond yields rising 6 basis points to 4.39%, the highest level since late May.
Reeves, along with Prime Minister Keir Starmer, has reiterated that tough fiscal measures are needed to help improve Britain’s public finances.
They are trying to maintain investor confidence, two years after then Prime Minister Liz Truss’s tax cut plans caused a crisis in the bond market.
“Despite the large tax increase, there were no major negative surprises in the budget, while Reeves’ strong pledge to push for a balanced budget was supportive,” said Jane Foley, head of FX strategy at Rabobank in London.
“It remains to be seen whether UK growth will indeed rise through higher investment, but this Budget has been heavily optimistic, which may quiet the skeptics for now.”
The euro last rose 0.34% to $1.0855, while the dollar was flat at 153.33 yen.
German growth and regional inflation data came in stronger than expected, prompting traders to lower their bets on an outsized European Central Bank rate cut in December.
The eurozone economy also grew by 0.4% in the third quarter, more than the 0.2% that economists had expected.
The dollar, which fell for the first time since August 8 to a low of $0.6537 after data showed inflation had slowed to a 3.5-year low, rose 0.3% to $0.6582.
