Dollar Holds Steady as Attention Drifts to the U.S. Job Data

Focus from investors shifted to the U.S. jobs data while the dollar held steady against a basket of currencies on Friday. This follows President Donald Trump’s unsurprising nomination of Federal reserve Governor Jerome Powell to be the next Fed chair.

Trump’s decision was in line with the expectations of market participants as he tapped Powell to lead the U.S. central bank. The dollar showed limited changes after the news.

The dollar index was last seen at 94.684, coming back from a one-week low of 94.411 set on Thursday. However it had slipped on the same day after the release of proposals to overthrow tax code by the Republicans in the U.S. House of Representatives.

Congressional passage of the legislation, however, was far from certain.

The slashing of the corporate tax rate to 20 percent from 35 percent was agreed upon by republicans, cutting tax rates on companies’ foreign earnings and also on individual and families. Congressional passage of the legislation showed less certainty.

According to Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore, although the contents of the tax reforms looks positive for the dollar, it is still debatable over how quickly it can be implemented.

“This could be quite a drawn out process,” Innes stated.

U.S. Economic Data Effect

October 2017 U.S. Job Data

The dollar could take its cues later on Friday from U.S. economic data. This includes jobs data for October and the Institute for Supply Management’s gauge of services sector activity.

October signaled a likely sharp rebound of the U.S. job growth after hurricane-related disruptions caused employment in September to decline. A strong increase could seal the case for the Fed to continue its plans to raise interest rates in December even as wage growth possibly slowed.

The euro retained at $1.1659 while against the yen, the dollar eased 0.1 percent to 114.00 yen, trading below a 3-1/2 month high of 114.45 yen that last Friday brought. Japanese markets closed for a public holiday causing trading volumes to be thinner than usual.

The sterling suffered its biggest one-day fall against the dollar since June on Thursday and is nursing its losses. This followed the Bank of England’s decision to raise interest rates for the first time in more than a decade but foretold only gradual rises. It inched up 0.1 percent to $1.3070, after having slipped 1.4 percent on Thursday. The benchmark Bank Rate was voted 7-2 by the BoE to be increased to 0.50 percent from 0.25 percent.

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