MW: Dollar slips as traders await U.S. October jobs report
LONDON (MarketWatch) -- Traders were happy to boost their risk exposure ahead of the release Friday of U.S. jobs data for October, strategists said, boosting equities and pressuring the dollar.
The dollar index (DXY 75.68, -0.06, -0.08%) , a measure of the greenback against a trade-weighted basket of rival currencies, stood at 75.611, off 0.2% on the day.
According to forecasts, nonfarm payrolls in the largest global economy probably fell for a 22nd straight month. The U.S. data are scheduled for release at 8:30 a.m. Eastern.
But according to a survey by MarketWatch, economists are looking for a decline in nonfarm payrolls of 150,000, less than the drop of 263,000 in September. The unemployment rate likely rose by a tenth of a percentage point to 9.9%, which would be the highest in 26 years.
Some analysts are predicting a jobless rate of 10% or even slightly higher, however.
Equity markets traded slightly higher after trimming initial gains, and U.S. stock-index futures played it cautious ahead of the data.
But against a backdrop in which the Federal Reserve showed little inclination to begin hiking U.S. interest rates, analysts said it may take a much bigger-than-expected drop in payrolls to put a dent in investors' appetite for risk. A greater willingness to take on investment risk has been negative for the dollar, while boosting equities and higher-yielding currencies.
"We are not convinced that ... [nonfarm payrolls data] will cause a major reversal of the pro-risk skew only two days after the Fed reiterated that interest rates will stay low for a prolonged period," said Kenneth Broux, market economist at Lloyds TSB.
It would take "exceptionally weak" data -- on the order of a payrolls fall of more than 250,000 or a jump in the jobless rate above 10% -- to deter traders from selling the dollar to fund carry trades and favor long equity positions, he said.
The dollar bought 90.63 Japanese yen, down from 90.73 yen in late North American trading Thursday.
The British pound was trading at $1.6606, up from $1.6581, while the euro changed hands at $1.4880, up slightly from $1.4874 late Thursday.
On Thursday, the dollar fell against the yen while gaining on the euro, with traders playing off the European Central Bank's decision to leave euro-zone interest rates unchanged as well as the Bank of England's move to boost the size of its quantitative-easing program. See full story.
Also Friday, the Australian dollar went for 91.59 U.S. cents, up 0.7%.
Australia's central bank raised its inflation and economic-growth forecasts overnight and hinted at more interest-rate tightening ahead.
