By Rocky Swift
TOKYO, April 6 (Reuters) - The dollar crept higher on
Thursday but stood near a two-month low as traders weighed how
pivotal U.S. jobs data coming out on a stock trading holiday
would impact Federal Reserve policy, after a raft of data this
week pointed to a cooling economy.
The closely watched U.S. non-farm payrolls report on Friday,
when many markets globally are closed, will follow disappointing
services sector data from the Institute for Supply Management
(ISM) and private employment figures on Wednesday, as well as a
slump in U.S. March manufacturing activity at the start of the
week.
While the slew of sluggish economic data has caused traders
to scale back bets on how much longer U.S. rates would need to
stay in restrictive territory, it has simultaneously reignited
recession fears.
That has put a lid on risk appetite and sent traders in
search of some safe haven assets.
The U.S. dollar index was up 0.14% at 102.01, having
slid to a two-month trough of 101.40 in the previous session.
The Japanese yen also found some support from safe
haven bids and was last roughly 0.1% higher at 131.20 per
dollar.
Meanwhile, the risk-sensitive Australian and New Zealand
dollars slid 0.39% and 0.38%, respectively.
"Weak economic data continues to weigh in on investor
sentiment, triggering a flight-to-safety bid," analysts at
Westpac said in a note to clients.
The risk-averse mood sent U.S. shares lower on Wednesday while Treasuries advanced, which saw the benchmark
10-year yield falling to its lowest since September .
Yields fall when bond prices rise.
The 10-year Treasury yield was last at 3.2958%, while the
two-year yield , which typically moves in step with
interest rate expectations, stood at 3.7605%. "The key to FX is going to be that interplay between what
the what the U.S. economy numbers dish up as far as interest
rates and sentiment about Fed policy," said Ray Attrill, head of
FX strategy at National Australia Bank.
In other currency action, sterling declined
0.2% to $1.2437, while the euro slipped 0.14% to
$1.0891.
The dour economic signs have strengthened the view that the
Fed will reverse course on rate increases, with traders hoping
for more insight when Federal Reserve Bank of St. Louis
President James Bullard speaks later on Thursday.
Cleveland Fed President Loretta Mester, a known hawk, said
in an interview with Bloomberg TV on Wednesday that it was too
early to know if the Fed would need to raise its benchmark rate
at its next policy meeting in early May.
U.S. rate futures markets are currently pricing in a roughly
even chance of the Fed leaving rates unchanged at its next
meeting, with rate cuts being priced in as early as July and
through to the end of the year. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Rocky Swift and Rae Wee; Editing by Edwina Gibbs
and Jamie Freed)
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