Dollar Drops Amid Narrow Ranges as Traders Await Next Drivers

Updated on
  • Greenback pares losses, remains lower vs most G-10 peers
  • Euro stays steady after televised speech by Catalan president

The dollar pared a second day of modest losses after a private-sector employment report came in as expected and a services industry gauge rose to a 12-year high.

The Bloomberg Dollar Spot index declined 0.1 percent, and the dollar fell versus all of its G-10 peers save the Swiss franc. Most currency pairs were confined to tight and familiar ranges as investors bided time until the September non-farm payrolls report due Friday. The euro was unmoved by a much-anticipated speech by Catalan President Carles Puigdemont late in the session.

  • Flows have been very muted on the day, traders in Europe and London said; USD swings have correlated closely with moves in the U.S. Treasury 10-year yield, which rebounded from an early low to close with a slight gain, settling near its ~2.321% 200-DMA. The Bloomberg dollar index more than halved its daily losses, while staying steady in afternoon trading
  • Wednesday’s ADP Employment Institute data showed private employers added 135k jobs in September, matching the median forecast and perhaps assuring that estimates for a gain of 80k in non-farm payrolls reasonably assess the impact of recent hurricanes. The ISM Non-Manufacturing Composite rose to 59.8 vs a median estimate of 55.5. Fed Chair Yellen offered welcoming remarks at a community banking event but didn’t offer comments on monetary policy
  • EUR/USD was trading around 1.1765 and failed to respond to remarks from Catalan President Puigdemont saying the government there has to apply the result of a referendum on independence and is seeking a mediation process. Markets are likely to continue to monitor developments in Spain
    • Ahead of the U.S. employment report, markets will parse the Thursday release of minutes from the ECB’s September meeting for views about moving toward tapering QE purchases. The shared currency has declined modestly vs a rebounding greenback since some policy makers expressed concern that a stronger FX rate complicated decision-making
    • EUR/USD may find technical support around the 1.1696 Tuesday low, and bids are in place at 1.1680 with stop-loss sell orders below, according to traders
  • USD/JPY was trading around 112.72 vs a high of 112.94 reached earlier in the U.S. session. Pair is expected to face resistance near 113.26 high from Sept. 27, where offers have been positioned in recent sessions
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