US Dollar drifts lower on mixed data ahead of US payrolls data

New York (Oct 1)  The dollar drifted lower on Thursday as traders puzzled over data sending contrary messages about the U.S. economy and prospects for a 2015 interest rate hike by the Federal Reserve.

A day before September's potentially market-rattling U.S. employment data, separate reports showed growth at U.S. factories slowed in September while weekly jobless claims pointed to a tightening labor market.

The data could complicate the Fed's plans to raise rates, a key attraction of the dollar for yield-hungry investors.

"The (Institute for Supply Management report on factories) was a little less than consensus, edging closer to that 50 level that marks expansion from contraction," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange. "Importantly we saw a downturn in the employment component of the ISM."

The dollar index dipped after the ISM report and was last off 0.23 percent, above its low of the day, and within a tight trading range likely to continue until Friday's employment data are published.

"Job growth near or north of forecasts of 203,000 for September could see the dollar test the upper limits of its range," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. "Outsized gains could be a thing of the past since the Fed has signalled a go-slow approach to lifting rates from basically zero."

The euro was up 0.19 percent against the dollar at $1.1194 while the dollar was buying 119.77 yen, reflecting a decline of about 0.12 percent from late U.S. trading.

The dollar was up 0.24 against the Swiss franc at 0.9768 franc.

The safe-harbor yen, Swiss franc and low-yielding euro were pressured by global stock markets rallying after their worst quarterly performance in four years.

Economists expect Friday's U.S. nonfarm payrolls report to show that employers added 203,000 jobs in September, according to a Reuters poll.

Source: Reuters