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Dollar trades mixed ahead of ECB, jobs data

Dollar trades mixed ahead of ECB, jobs data

The dollar struggled to find a direction Wednesday ahead of a meeting of the European Central Bank and leaders of major world economies Thursday, and a key jobs release Friday.
The 16-nation euro dropped to $1.3215 from $1.3283 late Tuesday.
Meanwhile, the British pound rose to $1.4414 from $1.4347, and the dollar slipped to 98.60 Japanese yen from 99.07 yen.
Markets are expecting the European Central Bank to cut its benchmark interest rate by half a percentage point to a new record low of 1 percent when it meets Thursday.
Cutting interest rates can undermine a currency as investors transfer funds to where they can earn better returns.
Furthermore, investors are anxiously waiting to hear whether the ECB, which is one of the few central banks to have held out on unconventional monetary measures to stimulate lending, often referred to as "quantitative easing," will follow in the path of the Federal Reserve, Bank of England and Swiss and Japanese central banks in buying up massive amounts of bonds.
These measures, by pouring money into the system, could trigger inflation and thus devalue a currency.
Markets are not expecting the ECB to change course, said Bank of New York Mellon senior currency strategist Michael Woolfolk. That position is not "fully justified," Woolfolk said, as ECB president Jean-Claude Trichet "has shown increasing openness to 'non-standard measures.'"
Also Thursday, 20 of the world's industrialized and emerging nations will convene in London for a follow-up summit to an economic meeting in Washington in November.
Attending are China and Russia, two countries that have called for a new global reserve currency backed by the International Money Fund to supplant the dollar.
The G-20 summit is not largely expected to dwell on the issue, Woolfolk said.
Also on Wednesday, two economic reports bested expectations in the U.S., prompting some hope that there may be light at the end of the recession tunnel. Pending home sales rebounded in February from a record low in January, said the National Association of Realtors, while the Institute for Supply Management said its manufacturing index rose to 36.3 in March, slightly better than economists had expected.
The key unemployment report from the Labor Department is due Friday.
In other trading, the dollar rose to 1.1487 Swiss francs from 1.1395 francs late Tuesday, and edged up to 1.2651 Canadian dollars from 1.2605.
The greenback was also higher against the New Zealand and Australian dollars.


Updated : 2021-10-27 16:04 GMT+08:00