Dollar edges up vs. yen before investors seek rate-hike clues from ADP jobs data
New York (Aug 31) The US dollar edged up against the yen and held steady against the euro Wednesday, ahead of an update on private-sector hiring before the release of the U.S. government’s closely watched labor-market report due later this week.
The greenback was up against the yen USDJPY, +0.32% at ¥103.21, up from ¥103.03 late Tuesday in New York. The U.S. currency in Asia overnight climbed to a fresh one-month high of ¥103.23.
The euro EURUSD, -0.1077% meanwhile, bought $1.1145, little changed from $1.1140 in the previous session. The shared currency was steady after Eurostat data showed consumer-price inflation in the eurozone was 0.2% higher in August than during the same month a year earlier, below expectations of a 0.3% rise.
The U.S. Dollar Index DXY, +0.04% a measure of the greenback against a basket of six rival currencies, was little changed at 96.012.
That gauge rose Tuesday after Federal Reserve Vice Chairman Stanley Fischer reiterated that the central bank could raise interest rates more than once in the coming months, provided U.S. economic data holds up.
Investors will get a look at hiring conditions in the private sector at 8:15 a.m. Eastern Time on Wednesday when ADP releases its August jobs report.
Market expectations are for the addition of 175,000, which would be “slightly below the 179,000 print in July, but still a solid print overall considering that as the labor market continues to tighten, it is normal for the pace of jobs growth to slow,” said Charalambos Pissouros, senior analyst at IronFX Global, in a note.
While ADP’s figures have been “far from close” to the Labor Department’s nonfarm payroll number over the last few months, an ADP report that meets or exceeds expectations “could extend the dollar’s recent gains,” he added.
The WSJ Dollar Index BUXX, +0.04% was off less than 0.1% at 87.02 before the ADP report.
The Labor Department on Friday is expected to say the world’s largest economy added 185,000 jobs in August.
Read: Friday could be an important turning point for the dollar
The “market still sees only a 24% chance of a U.S. rate hike in just three weeks’ time,” according to CME futures data, said Nawaz Ali, currency strategist at Western Union, in a note.
“But if U.S. job creation on Friday comes in around the 200,000 threshold, we could see this rate hike probability jump to around 30-35%. Anything over a 1 in 3 chance should cause a material [dollar] rally,” Ali said.
But a report that undershoots expectations could see the rate-hike probability drop below 15% and the dollar weaken, he said.
In other action, the pound GBPUSD, +0.3593% pushed higher after the Nationwide Building Society said U.K. house-price growth picked up slightly in August, in contrast with earlier signs that the housing market may be cooling after the country’s Brexit vote in June.
Sterling was trading at $1.3142, compared with $1.3081 late Tuesday.