Investing.com - The U.S. dollar edged lower in early European trade Friday, on course to end a six-week winning streak ahead of the release of the highly-anticipated monthly U.S. jobs report.
At 03:15 ET (07:15 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 103.544, but is down around 0.4% so far this week.
Nonfarm payrolls loom large
The greenback saw some buying on Thursday after data showed that U.S. personal spending grew much more than expected in July, but the U.S. currency is set to snap a long running positive streak as a batch of weak economic readings fueled bets that the Federal Reserve will keep rates on hold in September.
That said, volumes are limited ahead of the vital August nonfarm payrolls number, as traders look for the latest clues that could inform the path for Federal Reserve policy over the near term.
Analysts expect the U.S. economy created 170,000 jobs last month, down from 187,000 the prior month, while the unemployment rate is expected to stay at 3.5%.
Any signs of strength in the labor market would provide the Federal Reserve with more impetus and headroom to keep raising interest rates.
Euro slips ahead of eurozone manufacturing PMI release
Higher-than-expected inflation numbers in the region’s major economies of Germany, France and Spain had raised expectations of a jump in inflation, but this failed to materialize.
There is a great deal of uncertainty surrounding the European Central Bank’s next policy meeting, with inflation remaining above target but board member Isabel Schnabel, a noted policy hawk, acknowledging that eurozone growth is weaker than predicted just a few months ago.
The final eurozone manufacturing PMI release is due later in the session, and a small improvement is expected with the August figure after the previous number saw activity in the sector slowing at the fastest pace since the start of the pandemic.
“Our macro team feels that the chances of a September rate hike are under-priced (now a 43% probability) meaning that EUR/USD could get a little support from the ECB story over the coming weeks,” analysts at ING said, in a note.
Yuan slips despite PBOC move
USD/CNY rose 0.1% to 7.2622, with the yuan receiving very little support from a private survey showing that China’s manufacturing sector unexpectedly grew in August and the People’s Bank of China cutting the ratio of foreign exchange reserves required to be held by local banks.
While this should offer support for the Chinese currency, the broader outlook for the second largest economy in the world, and in turn the yuan, still remains dour as a post-COVID economic recovery slows.