Investing.com – The U.S. dollar traded in tight ranges on Thursday as investors digested mixed economic data ahead of a widely watched payrolls report that will end the week.
At 05:35 ET (09:35 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, rose slightly to 103.917, hitting its highest level since tardy July on Tuesday.
The dollar is stabilizing
After recent gains, the dollar is struggling to continue to rise as recent economic readings have proven arduous to read in terms of the strength of the U.S. economy.
In October, data showed the U.S. was growing, but in September it fell to the lowest level since January 2021 than expected.
Additionally, the data showed that the annual growth rate in the third quarter was 2.8%, slightly below the 3% expected by economists.
Thursday’s economic data includes weekly data and the deflator, the Fed’s preferred price gauge, but most eyes will be on Friday’s release.
The events preceding Tuesday’s presidential election were also compelling, when the dollar gained on bets that the Republican Party candidate Donald Trump would win, although the race with Vice President Kamala Harris seems very close.
DXY is currently near support at 104.00, ING said, “and after a one-way bullish move for over a month, a minor correction in the 103.65 area may follow.”
Increase in retail sales in Germany
In Europe, the rate was unchanged at 1.0857, after a surprise rise in September, gaining 1.2% compared to the previous month.
This followed data showing growth of 0.2% in the third quarter compared to the previous three months, above expectations.
However, the European Central Bank is still expected to continue cutting interest rates, especially if interest rates remain below the central bank’s 2.0% target later in the session.
The Council has cut interest rates three times this year, with the most recent reduction taking place at its last meeting in October, marking the first parallel cut since the euro crisis in 2011.
“EUR/USD could retest yesterday’s high of 1.0870 based on today’s European data – but a move up to 1.09030 may be a bridge too far given the key US elections next Tuesday,” ING added .
rose 0.1% to 1.2976 in the wake of Wednesday’s UK budget, the first for the fresh Labor government.
“Labour’s large tax and spending budget – described by some as ‘old Labor policy’ – continues to reverberate across UK asset markets,” ING noted. “Sterling briefly appreciated yesterday on the view that the budget is stimulative and that the Bank of England’s monetary easing cycle will need to be re-priced at a higher amount.”
“However… we suspect that the government’s budget plans are unlikely to be influenced by the BoE.”
The BOJ is keeping interest rates low
fell 0.6% to 152.47, with the yen gaining even after ultra-low interest rates remained earlier on Thursday.
BOJ Governor Kazuo Ueda stressed the need to analyze global economic developments when deciding on the next policy tightening, emphasizing its focus on threats to the country’s brittle economic recovery.
“Regarding the timing of the next interest rate increase, we have no pre-determined plan. We will analyze available data at each policy meeting and update our view of the economy and prospects as we make policy decisions,” he said.
rose 0.1% to 7.1192 after the release of the Chinese index, which showed that activity in October increased for the first time in six months.
The official PMI rose to 50.1 in October from 49.8 in September, just above the 50-point divide between growth and contraction.
