Key points:
- U.S. dollar nears three-week lows ahead of payrolls data
- Pound firm as Labour party looks set to win a massive majority
The U.S. dollar hovered near three-week lows on Friday, anticipating the release of payrolls data that could influence the outlook for interest rates. Meanwhile, the pound remained firm as the Labour party seemed poised to secure a significant majority in the UK general election.
Sterling (GBPUSD) was last at $1.27575, little changed in early trading and not far from a three-week high of $1.27765 touched on Wednesday.
Picture: Sterling trading at 1.27633 as seen on the VT Markets app.
It is up 0.9% for the week, marking its best weekly performance since mid-May and remains the strongest-performing major currency against the dollar this year, with a gain of 1.2%.
Labour party set to secure majority, easing market volatility
The centre-left Labour party appeared on track to capture 410 of the 650 seats in parliament, securing a majority of 170 seats and providing investors with much-needed certainty after years of market volatility under the Conservatives. This development pushes the risks associated with the UK election further down the line.
The euro (EURUSD) was little changed at $1.0816 as traders refrained from making major bets with France gearing up for the run-off election on Sunday. Polls suggest the far-right National Rally (RN) is likely to fall short of a majority.
The single currency, which has been under pressure since French elections were called in June, is up nearly 1% for the week and on track for its strongest weekly performance of the year.
You might be interested: Euro climbs following France’s first-round vote, yen falters
U.S. traders await non-farm payrolls with rate cut expectations
As U.S. traders return from their July 4th holiday, attention will shift to non-farm payrolls data due later on Friday. The report is expected to show an increase of 190,000 jobs in June, following a rise of 272,000 in May.
A series of economic data indicating a cooling U.S. economy has heightened expectations that the data-sensitive Federal Reserve will cut rates soon.
Dollar index edges lower as yen strengthens
The dollar index (DXY), which measures the U.S. currency against six rivals, was down 0.1% at 105.05, close to its lowest point since mid-June. The yen (USDJPY) was 0.16% higher, up for a second straight day, a pattern not seen since the start of June. It last fetched $161.095 per dollar, moving away from the 38-year low of 161.96 on Wednesday.
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