Sterling, euro climb against dollar on economic data By Reuters –

©Reuters. File photo: A woman holds a US dollar bill in this illustration taken on May 30, 2022.Reuters/Dado Ruvic/Illustration/File photo

Written by Gertrude Chavez-Dreyfus and Joyce Alves

NEW YORK/LONDON (Reuters) – The dollar strengthened for the first time in two weeks a day earlier as the positive impact of better-than-expected U.S. labor market data faded and investors braced for Friday's release of the all-important non-farm payrolls number. After hitting a high, it fell on Thursday. .

The U.S. currency rose earlier after data showed private U.S. employers hired more workers than expected in December. Private payrolls rose by 164,000 people last month, the largest monthly increase since August, according to the ADP National Employment Report. Economists polled by Reuters had predicted that private sector employment would rise by 115,000.

At the same time, initial claims for state unemployment benefits fell by 18,000 in the week ending Dec. 30 to a seasonally adjusted 202,000, boosting the dollar. Economists polled by Reuters had predicted 216,000 insurance claims in the past week.

The dollar initially rose on the news, but the gains have since slowed.

“Yes, there was a wave in the number of jobs created in the ADP report, but I would still like to point out yesterday's JOLTS, which shows that the turnover rate is decreasing and the employment rate is also decreasing. ” said Thierry Albert Wismann, Head of Global Currency and Interest Rates. Strategist at Macquarie in New York.

“So weakness is still priced into the labor market, and I think that will show up in lower wage inflation tomorrow in non-farm payrolls,” he added.

Following Thursday's data, the U.S. interest rate futures market lowered its forecast for the number of rate cuts in 2024 by 25 basis points to four, from about six late Wednesday, according to LSEG's interest rate probability app.

“It's important to remember that the Fed will have to take several steps before lowering rates,” Wisman said.

“To cut rates, we first need to move to a neutral bias and then to an accommodative bias, which could take several meeting cycles.”

The publication on Wednesday of the minutes of the US Federal Reserve's December 12-13 policy meeting was perceived by market participants as somewhat hawkish. “It would be appropriate for policy to maintain a suppressive stance for some time until inflation has clearly and sustainably declined toward the (Federal Open Market) Committee's goals,” Fed officials said. emphasized.

“Certainly, yesterday's Fed minutes did not indicate a rate cut in March,” Wisman said.

Among cryptocurrencies, Bitcoin rose 2.9% to $44,114. Investors are hoping that the first spot Bitcoin exchange-traded fund will be approved by the U.S. Securities and Exchange Commission in the next week or so.

In late morning trading, the index was slightly lower at 102.33, after hitting a two-week high on Wednesday.

The dollar rose to a two-week high against the yen, rising for the third day in a row. The dollar last rose 1% to 144.7 yen, its biggest single-day gain since late October.

Macquarie's Wisman doesn't think the dollar's gains since the start of the year can be sustained, even though expectations for rate cuts have subsided.

“I think the U.S. economy will slow, but it will be a consumer-driven slowdown, and growth rates in the U.S. and the rest of the world will converge this year,” Wisman said.

“We could see some weakness in the dollar against the euro, pound and yen in the first six months of this year.”

The euro rose 0.3% against the dollar to $1.0956 as European inflation indicators rose.

French consumer prices rose as expected in December due to annual increases in energy and services prices, provisional data from the national statistical agency showed on Thursday. In Germany, CPI inflation rose to 3.7% in December from 3.2% the previous month, as expected.

Sterling also strengthened against the dollar after data showed increased demand for loans by British borrowers and business services were more resilient in the UK than feared.

UK net borrowing data shows increased demand for loans by UK borrowers, with households mostly coping with high interest rates. Net borrowing by UK consumers in November was the highest in nearly seven years.

Another business survey, the UK Services Purchasing Managers' Business Index (PM), showed growth for UK services companies was stronger than initially expected in December, with optimism at a seven-month high. .

The pound was last up 0.3% at $1.2698. The stock rose as much as 0.5% to $1.2728 after the data was released, and fell 0.87% on Tuesday to a three-week low and its biggest single-day decline since mid-October. .



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