Forex Market Update: Dollar Steady but Strong Job Data Could Propel it

The U.S. dollar index eased slightly on Thursday as downwardly revised U.S. first-quarter GDP data, released in the previous session cast a shadow of doubt over the state of the world’s largest economy.

The dollar Index, a measure on U.S. unit’s performance against a basket of six major traded currencies, slipped to 82.94 on Thursday, having hit a four week high of 83.025 on Wednesday.

However, the dollar could bounce back later during the day, should the Labor Department’s weekly jobless number show further improvement in the U.S. economy. Strong job data will raise chances that the Federal Reserve could start winding down its bond purchase program, sooner-than-expected, which will boost the U.S. dollar.

Widening spreads between treasuries and German bunds and relatively better shape of the U.S. economy compared to the euro zone and Japan, have been the key factors behind dollar’s rise in the recent past.

At last check, the euro was up 0.16% to trade at $1.3033.

Analysts, according to Reuters, believe that euro’s gain will be capped as the ECB President Mario Draghi hinted at the continuation of the dovish monetary policy on Wednesday.

The yen traded sharply lower against the USD dollar though. At last check, the Japanese currency was down 0.44% to trade yen9817.

Speaking to Reuters, Asmara Jamaleh at Intesa Sanpaolo in Milan said, “There are some expectations that U.S. data this afternoon will be good … the yen should fall further and reach 100,  if U.S. data do not disappoint.”

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.