Dollar rebound holds as yields hold steady ahead of jobs data

NEW YORK, Aug.4 (Reuters) – The dollar maintained its gains on Wednesday after a rapid rally from an earlier drop as markets chose to focus on a suggestion by a senior U.S. Federal Reserve official that the central bank could further reduce its support for improving the economy. quickly than we generally think.

Bullish comments on the US economy by Fed Vice Chairman Richard Clarida triggered a rebound in US Treasury yields and distracted market attention from the two-hour release of a jobs report two hours earlier surprisingly weak private sector that had caused the dollar to fall. Read more

The dollar went from a 0.3% drop for the day to a 0.3% rise on opposing clues as to whether the United States will see strong economic growth and higher interest rates or a serious brake on the coronavirus pandemic.

ADP’s national employment report was seen as perhaps foreshadowing weak July employment data due on Friday. But there were doubts about its value as a predictor, and another report showed US service sector activity to hit an all-time high in July. Read more

Currency markets expected Friday’s non-farm payroll report to be the next big catalyst for exchange rates, followed by comments expected at a central bankers symposium later this month in Jackson Hole, Wyoming.

In the afternoon in New York, the dollar index against major currencies was up 0.2% to 92.246.

The Japanese yen, often seen as a competitive safe haven, benefited greatly from the dollar’s initial fall in the ADP report and gained 108.77 per dollar, but was unable to maintain its breakout below 109. The dollar was last traded at 109.45 yen. , up 0.4%.

The euro and the pound also hovered against the greenback. The euro was last traded at $ 1.1840, down 0.2% for the day. The British pound lost 0.2% to $ 1.3889.

The initial downdraft came when the ADP report showed that the private sector wage bill in the United States had increased by about half of what economists had predicted, likely hampered by shortages of workers and raw materials.

“It was a pretty big disappointment,” said Mazen Issa, senior currency strategist at TD Securities.

The ADP report has a mixed record when it comes to predicting the government report, Issa said, but added that “the failure is significant enough that markets are a little more nervous as the report draws near. Friday”.

Federal Reserve Chairman Jerome Powell and other policymakers recently stressed that upcoming jobs reports will be critical to board decisions on when and how to reduce support for the economy . Read more

Fed policymaker Robert Kaplan told Reuters on Wednesday that more “progress” in the July and August jobs reports would be a reason to start pulling out bond purchases “soon”. Read more

The dollar has fallen in value in recent weeks as lower yields have made policy makers question whether the U.S. economy will grow as much as they expected in light of the spread of the highly contagious Delta variant. of COVID-19.

Ether, the second largest cryptocurrency, rose 7% to $ 2,690 ahead of an upcoming change in the Ethereum blockchain network that will take some tokens out of circulation.

Bitcoin rose 4% to $ 39,640.

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Currency bid prices at 3:14 p.m. (1914 GMT)

Reporting by David Henry in New York and Iain Withers in London; edited by Kirsten Donovan and Sonya Hepinstall

Our Standards: The Thomson Reuters Trust Principles.