Dollar takes back some ground ahead of jobs report

Filed under: Daily News |

The dollar regained some ground Wednesday after a two-day slide, ahead of a key U.S. jobs report and the European Central Bank’s meeting on interest rates.

The U.S. currency has drooped lately because many investors expect the global recovery will strengthen. That’s given a boost to assets perceive as riskier that could deliver bigger returns in an improving economy: assets such as stocks, commodities and currencies from emerging markets.

But the slide came to a halt Wednesday.

A private-sector report Wednesday showed that U.S. employers added more jobs than economists had forecast. That could point to a strong report on Friday when the Labor Department releases its January unemployment data, said Michael Woolfolk, a currency analyst with Bank of New York Mellon. Positive jobs data tend to give the dollar a boost.

In midday trading in New York, the euro fell to $1.3810 from $1.3820 late Tuesday. It had earlier in the day peaked at a three-month high of $1.3861.

European officials have begun signaling that they are concerned about inflation, a precursor to raising interest rates. Higher rates tend to boost a currency. In a meeting Thursday, the ECB isn’t expected to raise rates from 1 percent – where they have been since May 2009 – but investors increasingly predict that it will do so before the Federal Reserve begins lifting its key interest rate from the current range near zero. The Fed has also enacted other measures to push down interest rates.

Ratings agency Standard & Poor’s also downgraded Ireland’s credit rating Wednesday, which weighed on the euro, said CMC Markets strategist Ashraf Laidi.

The dollar rose to 81.58 Japanese yen from 81.40 yen, recovering from a one-month low on Tuesday. The British pound rose to $1.6192 from $1.6139, but retreated from a three-month high of $1.6229 earlier in the day.

The dollar also gained to 0.9372 Swiss franc from 0.9363 Swiss franc, but dropped to 98.78 Canadian cents from 99.22 Canadian cents.

The dollar is hovering just above a 2 and a half year low against the Canadian dollar, which has jumped alongside rising commodity prices. Canada is a major exporter of oil and other raw materials, and its currency tends to gain when commodity prices rise. Oil prices hit a two-year high above $92 a barrel earlier this week.

– Associated Press