US dollar weakens ahead of jobs data

US dollar (AFP/File/Shawn Thew)

WASHINGTON: The US dollar weakened against other major currencies on Wednesday in thin trading ahead of a US holiday and the highly anticipated American jobs report.

The euro bought US$1.3010 around 2100 GMT, up from US$1.2978 at the same time Tuesday.

The US dollar also fell against the Japanese currency, to 99.86 yen from 100.63 yen late Tuesday, while the euro dropped to 129.93 yen from 130.60 yen.

Trade volumes were extremely light ahead of Thursday's US Independence Day holiday, when the markets are closed.

"All the attention is on the US monetary policy and most investors are waiting for Friday's job figures" to try to anticipate the Federal Reserve's next moves, said Charles St-Arnaud, an economist at Nomura in New York.

"A good number would boost expectations of a reduction soon in bond purchases" by the Fed, "while a bad number would reduce those expectations," he said.

The Fed has said it would begin to wind down its US$85 billion a month quantitative easing (QE) asset-purchase program in the coming months if the economy continued to improve.

A pair of encouraging US jobs figures on Wednesday -- a rise in private-sector hiring and a fall in weekly claims for unemployment benefits -- bolstered expectations the US jobs report for June would show modest growth.

"How the markets react is anyone's guess. Good news might be bad news for the markets as anything that argues for the Fed to end QE sooner rather than later is not appreciated," said Joel Naroff of Naroff Economic Advisors.

"But even that reaction will likely change since good news is, well, good news."

The US dollar weakened to 0.9468 Swiss francs from 0.9505 francs late Tuesday.

The greenback also lost ground to the British pound, which bought US$1.5278 compared with US$1.5156 a day earlier.