Forex trends Friday: US dollar loses ground amid trade war fears, weaker jobs data

U.S. one-dollar currency notes; taken September 2018.U.S. one-dollar currency notes; taken September 2018.

The U.S. dollar lost ground on Thursday amid concerns the U.S. trade war against China wasn’t really taking a hiatus and amid signs the U.S. labor market might be cooling.

Canada’s Justice Department arrested Huawei Technologies Chief Financial Officer Meng Wanzhou earlier this week at the request of the U.S.

The Huawei arrest was seen a move that could further heighten tensions between the U.S. and China. Meng is suspected of violating trade sanctions on Iran. Huawei said in a statement that it wasn’t aware of any wrongdoing by Meng, Reuters reported.

“On paper, the Trump Administration wants to look like they are willing to work with China on trade but the seriousness of their intentions are questioned by this arrest,” Kathy Lien, managing director of foreign-exchange strategy at BK Asset Management, said in a note on Thursday, U.S. time.

She added that U.S. data “failed to impress,” with jobless claims increasing and ADP reporting a much smaller-than-expected rise in employment.

“There are more reasons to believe that job growth slowed than improved in the month of November,” she said.

“The U.S. labor market is one of the strongest parts of the economy but with stocks falling sharply over the past two months, businesses may have grown more conservative about hiring. Economists are looking for weaker job growth and if their outlook is confirmed, the dollar could extend its slide,” she said, adding that if upcoming U.S. jobs data doesn’t show an uptick in wages, the slide could be “even more significant.”

In addition, the dollar could lose a pillar of its support amid signs that the U.S. Federal Reserve might take a breather in its tightening cycle.

A report from the Wall Street Journal on Thursday said that U.S. Federal Reserve officials were considered whether to signal a wait-and-see approach after a December interest rate increase.

Currencies

The U.S. dollar index, which measures the greenback against a basket of currencies, was at 96.77 at 7:04 A.M. SGT, after dropping from as high as 97.19 to as low as 96.56 in Thursday’s session, according to ICE futures data.

The 10-year U.S. Treasury note yield was at 2.895 percent at 8:43 A.M. SGT after dropping as low as 2.843 percent from as high as 2.913 percent in Thursday’s session, according to Tullett Prebon data.

The euro/dollar was at 1.1373 at 8:46 A.M. SGT after trading in a 1.1320 to 1.1413 range on Thursday, according to DZHI data.

The British pound/dollar was at 1.2778 at 8:46 A.M. SGT after trading in a 1.2697 to 1.2812 range on Thursday, according to DZHI data.

The dollar/yen was at 112.711 at 8:46 A.M. SGT after trading in a 112.20 to 113.166 range on Thursday, according to DZHI data.

The dollar/yuan ended Thursday at 6.8815 after trading in a 6.8545 to 6.8958 range during the session, according to DZHI data.

The dollar/Singapore dollar was at 1.3969 at 8:47 A.M. SGT after trading in a 1.3662 to 1.3722 range on Thursday, according to DZHI data.

The dollar/Malaysian ringgit was at 4.1610 at 8:27 A.M. SGT after trading in a 4.1525 to 4.1670 range on Thursday, according to DZHI data.

The dollar/Indonesian rupiah was at 14,515 at Thursday’s close after trading in a 14,290 to 14,565 range during the session, according to DZHI data.

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