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The US dollar index, which measures the greenback against a basket of currencies, fell 0.68 per cent overnight, the largest fall since July 19, and last traded 105.79. ― Reuters pic

Friday, 05 Aug 2022 9:41 AM MYT

SINGAPORE, Aug 5 ― The dollar struggled to gain a footing today after falling by its sharpest pace in two weeks, as investors remained on tenterhooks ahead of the widely anticipated US jobs data and amid growing worries about a recession.

The US dollar index, which measures the greenback against a basket of currencies, fell 0.68 per cent overnight, the largest fall since July 19, and last traded 105.79.

Investors await the key US nonfarm payrolls report due at 1230 GMT, which will provide hints of how the US economy is faring. Economists expect an increase of 250,000 jobs for the month of July, after 372,000 were added in June.

“Payrolls just clearly seems to be on everyone’s mind for tonight, so I think that’s keeping things relatively subdued,” said Ray Attrill, head of FX strategy at National Australia Bank.

However, signs of softening in the labour market could already be underway, as overnight data showed that the number of Americans filing new claims for unemployment benefits increased last week.

Against the weaker greenback, the euro surged 0.8 per cent overnight and last traded US$1.0238 (RM4.54), though reprieve is likely short-lived as concerns about an energy crisis remain.

A stand-off over the return of a turbine that Russia says is holding back gas supplies to Europe showed no sign of being resolved yesterday, as Moscow said it needed documentation to confirm the equipment was not subject to sanctions.

“We still expect EUR/USD to trade below parity, more than just briefly, over the next few weeks,” said Joseph Capurso, head of international economics at Commonwealth Bank of Australia.

Meanwhile, sterling held steady at around US$1.2157 in the early Asia trade today, recouping most of its losses following a grim signal from the Bank of England. The pound is down about 0.3 per cent for the week, reversing gains made the previous two weeks.

Yesterday, the BoE raised its benchmark rate by half a percentage-point to 1.75 per cent, the highest since late 2008, but warned about a long recession ahead in Britain.

“Beyond the knee-jerk reaction to the very pessimistic Bank of England view of the economy ― which I think was what really drove the pound down initially ― there’s been no follow through effectively, and I don’t think anybody wants to take a view on whether that rebound is appropriate or not, until (we) see how the US dollar behaves tonight,” said NAB’s Attrill.

Elsewhere, the dollar tumbled 0.69 per cent against the yen overnight and is on track for a third straight weekly loss. It last traded ¥132.9 per dollar.

Similarly, the risk-sensitive Aussie and kiwi stood at US$0.6956 and US$0.6290, respectively, after rising about 0.2 per cent and 0.3 per cent overnight. ― Reuters