The dollar remains stable in early trade

3 Aug 2023 , 09:21 AM

The U.S. credit rating downgrade placed doubt on the country’s fiscal outlook, but the dollar ignored it and was trading around a four-week high on Thursday thanks to positive private payrolls data.

The dollar gained strength on Wednesday due to data showing that U.S. private payroll growth in July exceeded expectations and indicated ongoing labour market strength, which is likely to keep U.S. rates higher for longer.

In the session before, the dollar index reached its highest level since July 7 as a result. It was last at 102.56, not far from its high point on Wednesday of 102.78.

Early Asian trade saw a continuation of high U.S. Treasury yields, with the benchmark 10-year yield last seen at 4.0977% after surging to its highest level since November at 4.1260% on Wednesday.

The euro recovered some of its losses from the prior session, rising 0.06% to $1.0944. On Friday, the highly anticipated U.S. nonfarm payrolls report is due.

The risk-averse Australian and New Zealand dollars, which both fell by more than 1% on Wednesday, were also hit by the risk-off attitude.

Ahead of the Bank of England’s monetary policy announcement later on Thursday, when the institution is anticipated to hike interest rates to a 15-year high of 5.25% from 5%, sterling gained 0.02% to $1.2714.

The yen increased slightly to 143.31 per dollar, although it was still close to a more than three-week low of 143.545 set earlier in the week.

The Australian dollar most recently appreciated by 0.14% to $0.65465 after initially increasing on data that showed China’s services sector expanded at a slightly faster rate in July.

Kiwi value decreased 0.02% to $0.6079.

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