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Dollar languishes as weak US jobs data sparks safety flight

Thu Oct 03 2019

 

 

he dollar nursed losses on Thursday, hitting near one-week lows against the euro and yen, amid signs of a slowdown in US economic growth and a deepening of global trade tensions.

 

The greenback fell overnight after data showed hiring by US private employers had slowed in September, the latest indicator that the Sino-US trade dispute is hurting the world's largest economy. The weaker-than-expected numbers follow a separate release on Tuesday that showed a sharp decline in factory activity that sent stock markets and bond yields tumbling.

 

“The trend certainly in US data had been consistently beating expectations, so the sudden reversal of fortunes has created a rapid re-assessment,” said Chris Weston, head of research at brokerage Pepperstone Group in Melbourne. “There is not a lot of good news to inspire the bulls.”

 

In Asian hours, investors headed for safety. Stocks fell. Gold and the Swiss franc inched higher. The dollar weakened slightly to 107.13 Japanese yen and $1.0962 per euro, both only a fraction above a one-week lows touched overnight. It held close to a one-week low against the New Zealand dollar at $0.6264 per kiwi and weakened a little against the beaten-up Australian dollar to $0.6714.

 

The weakness in the US follows a slew of poor economic data from Europe and signs of a hastening slowdown in China.

 

Adding to concerns, the United States won approval on Wednesday to levy tariffs on $7.5 billion worth of European goods over illegal subsidies handed to Airbus, threatening to trigger a transatlantic trade war. The next readings on global economic health will be European August retail sales and a German service sector survey due on Thursday, and September's U.S. non-manufacturing ISM survey due at 1400 GMT.

 

Against a basket of currencies the dollar was flat at 99.022. The pound was steady at $1.2302 after fluctuating in a tight range as British Prime Minister Boris Johnson proposed an all-island regulatory zone in Ireland in his final pitch for a Brexit deal before the end of the month.

 

Sterling's outlook, however, remained uncertain after a cool response to the proposal from Brussels, leaving a no-deal exit from the European Union on October 31 a real possibility. “The question appears to be whether there is enough middle ground for the two sides to come to some sort of agreement by the time of the EU Summit on Oct. 17,” said Rodrigo Catril, senior FX strategist at National Australia Bank in Sydney.

 

In offshore trade, the Chinese yuan was steady at 7.1452 per dollar, with trade subdued as Chinese markets are closed until Monday for public holidays.

 

Source: Reuters

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