The US dollar fell against nearly every major currency on Tuesday, as traders await US job data this week for the next cue on market direction.
Commodity producers jobs were among the biggest gainers, with the New Zealand dollar and the South African rand both gaining close to 1%. The euro gained ground due to comments on stimulus withdrawal made by European Central Bank official Robert Holzmann.
The Bloomberg dollar index has fallen nearly 1.5 percent since its recent peak, with further pressure coming from last week's appearance by Federal Reserve Chair Jerome Powell, who sounded a cautious note on employment while hinting that the central bank may begin scaling back asset purchases this year.
“Markets continue to liquidate long-dollar positions following Powell’s Jackson Hole speech last week,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd. “Friday’s nonfarm payrolls will be a key data print for markets,” and a much better-than-expected number could halt the dollar’s decline, he said.
According to NatWest Markets Plc, a strong US employment report could increase the likelihood that the Fed will begin tapering as soon as next month. This is bad news for higher-yielding emerging-market assets. According to the median estimate in a Bloomberg survey of economists, growth in US payrolls Jobs likely slowed in August after increasing by the most in nearly a year the previous month.