By Peter Nurse
Investing.com – The dollar edged higher Wednesday, but remains near its lowest point in three weeks, after weak economic data out of both China and the Eurozone.
At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 92.745, after dropping on Tuesday as low as 92.395 for the first time since Aug. 6.
fell 0.1% to 1.1799, after climbing to 1.1845 in the previous session, the highest since Aug. 5, was up 0.2% at 110.22, edged higher to 1.3757, and the risk sensitive climbed 0.2% to 0.7330.
China’s fell to 49.2 in August, below the 50-mark indicating growth, contracting for the first time since April 2020. The [[elease points to slowing growth momentum in the world’s second-largest economy after China imposed strict measures to bring new virus cases under control last month. edged higher to 6.4617.
A further sign of slowing momentum was evident in Germany, where retail sales slumped 5.1% on the month in July, much more than expected. Despite that, upbeat comments from European Central Bank vice president Luis de Guindos and policymakers Robert Holzmann and Klaas Knot all pointed to the possibility of ECB policy turning slightly more restrictive toward the end of the year.
However, it is the August U.S. employment report, due on Friday, which remains uppermost in minds.
“At this stage, it appears that a September tapering announcement will highly depend on this week’s U.S. jobs data,” said analysts at ING, in a note. “Another strong number should give some support to the dollar which has otherwise remained broadly offered since the start of this week.”
The are widely expected to increase by around 750,000 in August, a strong number, but this would still represent a drop from the growth of 943,000 the previous month. ADP’s survey of private-sector hiring is due at 8:15 AM ET (1215 GMT).
The dollar was hit by comments from Federal Reserve Chair Jerome Powell on Friday, who indicated that the central bank was still likely to start to reduce its asset purchases this year but had no plans to start lifting interest rates anytime soon.
“There is an urge at the FOMC to de-link tapering and tightening,” added ING, and this “ultimately weighed on the dollar given the uncertainty around a 2022 rate hike (which, however, remains part of our economist’s forecasts).”
Also weighing on the greenback was Tuesday’s U.S. release, which came in at a six-month low.
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