Dollar dips vs euro, sterling before U.S. labor data


The dollar dipped on Thursday against the euro and the pound, which reached a nearly five-year high against the greenback after unexpectedly robust manufacturing data bolstered optimism about Britain's economy.

The dollar had fallen broadly on Wednesday on strikingly soft U.S. growth data, but was up on Thursday against the Japanese and other currencies. The dollar index, which declined Wednesday, was ahead 0.06 percent in New York trading.

Global currency volumes were thinned by holidays in Europe and Asia as traders awaited Friday's monthly reports on U.S. jobs.

Traders reacted little to U.S. Federal Reserve policymakers, who blamed much of the first quarter's weak growth on harsh U.S. weather, but will scour the April employment report on Friday for hints about the U.S. economy, Michalowski said.

In late-morning New York trade, the euro was at $1.39, up 0.04 percent for the day.

The pound was worth $1.69, a gain of 0.08 percent. Against the yen, the dollar was up 0.1 percent at 102.34 yen.

Pound higher

Sterling has gained around 10 percent against a trade-weighted basket of currencies in the past 12 months but has struggled to make progress since mid-February as many players judged the best news on the economy had been priced in.

There are growing doubts over whether inflation, investment and underlying demand in the economy will be strong enough to force the Bank of England to raise interest rates early next year, as market pricing suggests.

The euro's continued strength in the face of a steady reining-in of U.S. monetary policy stimulus and of expectations that the European Central Bank will be forced at some stage to do the opposite has become one of this year's dominant trends.

Policymakers at the euro zone's central bank have talked aggressively about their willingness to take action to head off a debilitating cycle of falling prices and demand, and as such have outright opposed any further gains for the euro.

But they face substantial barriers to delivering the sort of decisive policy action that would weaken the currency at a time when capital is flooding back into the euro zone's peripheral economies and stock markets.