Currencies: Dollar weakens as focus shifts to September jobs report
The dollar weakened against its main rivals Thursday after a report showed the U.S. manufacturing sector grew at its slowest pace in more than two years and investors looked ahead to September jobs data.
The Institute for Supply Management’s manufacturing index dropped to 50.2% last month from 51.1% in August, as a stronger dollar and a weaker global economy hurt U.S. exports.
The ICE U.S. Dollar index DXY, -0.09% a measure of the dollar’s strength against a basket of six rival currencies, was down 0.2% at 96.1740.
The dollar USDJPY, +0.05% was at ¥119.89 late Thursday in New York, down 0.1% from ¥119.88 late Wednesday in New York. The euro EURUSD, +0.0805% edged higher to $ 1.1185 late Thursday up 0.1% from $ 1.1175 late Wednesday. The pound GBPUSD, +0.0000% traded at $ 1.5130 Thursday, little changed from its late-Wednesday level.
Traders are now looking ahead to the Labor Department’s monthly reading on the state of the U.S. job market. But Omer Esiner, chief market analyst at Commonwealth Foreign Exchange, said he doubted the data would provide any meaningful insight as to when the Federal Reserve might raise interest rates.
“We’ve seen a lot of strong job numbers and the Fed hasn’t acted, so in my opinion, another strong number wouldn’t solidify the outlook for a rate hike this year,” Esiner said.
If the number comes in above 200,000 new jobs, investors might see a knee-jerk reaction in the dollar, Esiner said. But he doubts a strong report will lead to lasting support. Likewise, a weak number likely wouldn’t take a rate increase in 2015 off the table.
The dollar weakened against its emerging-market and commodity-linked rivals early in the global day after a reading on China’s manufacturing sector.
China’s Caixin manufacturing PMI showed the index fell to a 6½-year low in September, but was revised slightly higher from an initial reading earlier in the month.
This triggered “a little bit of a risk-on-type sentiment overnight,” according to Esiner. This helped support the so-called commodity dollars—the currencies of Australia AUDUSD, +0.1710% , New Zealand NZDUSD, +0.0000% and Canada CADUSD, +0.3770% .