Preliminary employment data boosts dollar losses by Investing.com

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Investing.com – An improvement in private-sector job growth in February, although growth was slightly slower than expected, added to losses, which started trading lower in anticipation of Powell's testimony.

At 16:35 Riyadh time, the dollar index, which tracks the US currency against a basket of six other currencies, fell 0.19% to 103.559, after falling from a three-month high in the past two weeks.

This was an increase from an upwardly revised reading of 111,000 from 107,000 in January, but slightly below the expert estimate of 149,000.

Job gains came across multiple sectors, with leisure and hospitality adding 41,000 jobs, and construction adding 28,000 jobs. Other industries that showed strong increases included trade, transportation and utilities (24,000), finance (17,000) and the other services category (14,000).

Growth was concentrated among large firms, with firms with fewer than 50 employees contributing only 13,000 employees to the total.

Along with job growth, annual wages for those who remained in their jobs rose 5.1%, the smallest increase since August 2021, ADP said, a possible sign of easing inflationary pressures.

The report comes as the labor market receives extra attention for signals that US economic growth will stall this year, after GDP posted a strong annual increase of 2.5 percent in 2023.

Powell appeared before Congress

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The dollar gained on Tuesday after February data showed, but losses were small as investors awaited the start of Fed Chairman Powell's two-day testimony before Congress.

He is expected to appear before a House committee on Wednesday and a Senate committee on Thursday to reaffirm that policymakers will take a cautious approach in deciding when to cut interest rates in response to persistent price pressures. .

“We believe Chair Powell may not be as hawkish as some think today, and we see some downside risks to the dollar,” analysts at ING said in a note.

However, any losses may be made up before the long-awaited Friday monthly release.

Signs of continued strength in the labor market could make it harder for investors to ignore concerns about how a stronger-than-expected economy could reignite inflation if the central bank starts easing too soon.

Euro supported by German export growth

In Europe, trading rose 0.2% to 1.0873 as the euro was supported by better-than-expected German trade data, raising hopes that the recession in the euro zone's dominant economy may be ending. .

It rose more than expected at the start of the year, reaching 6.3% in January compared to the previous month, thanks to stronger demand from EU countries and China.

It meets on Thursday to set monetary policy, but interest rates are widely expected to remain at a record 4%.

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ING analysts said: “We believe there are some downside risks to the euro from tomorrow's ECB meeting.” “If today's US event risks prove negative for the dollar, we believe EUR/USD will still struggle to maintain a gap above 1.0900.”

It traded 0.2% higher at 1.2728 ahead of the UK spring break later in the session, as Chancellor Jeremy Hunt is under pressure to cut taxes in a bid to boost his party's waning popularity ahead of the 2024 election. .

However, the turmoil of September 2022 is still remembered – former prime minister Liz Truss and her then chancellor Kwasi Kwarteng spooked markets with promises of unfunded tax cuts – so Hunt may have limited scope for action.

Yen rose below 150

In Asia, trading fell 0.2% to 149.81, with the yen rising just below the 150 level, supported by a weaker dollar.

The focus is on when to start raising interest rates.

{{2111|The currency pair against the US dollar}} rose 0.1% from 7.1993 to close at 7.2 as sentiment in Asia's largest economy remains weak after the Chinese government set a 2024 GDP target of 5%. As of 2023. Few signals were given of further political support for the economy.

Also, it rose 0.2% to 0.6516 after Australian fourth-quarter data showed growth as expected, showing that stronger government and capital spending helped offset a sharp decline in private consumption.

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