The dollar rose on Friday, but struggled to regain ground recently lost after suffering its biggest drop in two weeks, as investors remained on edge waiting for jobs data in the United States and in the context of growing concern about the recession.
The US dollar index, which measures the greenback against a basket of currencies, rose 0.15% to 105.86, after falling 0.68% overnight, the biggest drop since July 19.
Investors are awaiting the report on US jobs creation, to be published at 1230 GMT, which will give clues about the evolution of the US economy. Economists expect an increase of 250,000 jobs for the month of July, after 372,000 were added in June.
“The (employment) payroll report seems to be on everyone’s mind, so I think that’s holding some moderation,” said Ray Attrill, head of currency strategy at National Australia Bank.
However, signs of moderation in the job market may already be underway, as overnight data showed the number of Americans filing new jobless claims rose last week.
Faced with greenback weakness, the euro was stable around $1.0237, after rising 0.8% overnight. However, the euro’s recovery from recent losses is likely to be short-lived as concerns about the energy crisis persist.
On Thursday, the dispute over the return of a turbine that Russia says is forcing cuts in gas supplies to Europe showed no sign of being resolved, as Moscow said it needed documentation to confirm the equipment was not subject to sanctions.
“We continue to expect EUR/USD to trade below parity … for the next several weeks,” said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia.
For its part, the British pound was down 0.14% to $1.21405 and has lost 0.35% on the week, reversing the gains of the previous two weeks.
On Thursday, the Bank of England raised its benchmark interest rate by half a percentage point to 1.75%, the highest since late 2008, but warned of a long recession in Britain.
“The BoE’s hike is not unexpected. However, given its warning of persistently high inflation, it is a sobering reminder that central banks will continue to target inflation despite downside risks, unintentionally heightening the threat of a hard landing.” said Vishnu Varathan, head of economics and strategy at Mizuho Bank.
Elsewhere, the US dollar was up 0.21% against the Japanese yen at 133.215 per dollar, after falling 0.69% overnight.
The risk-sensitive Australian dollar and the New Zealand currency “kiwi” were little changed at $0.69645 and $0.6290, respectively.