Dollar index hovers near 12-year highs ahead of nonfarm payrolls

Investing.com –

Investing.com – The dollar remained near 12-year highs against the other major currencies on Friday, as growing optimism over the strength of the U.S. economic recovery continued to support the greenback and investors eyed a highly anticipated U.S. employment report due later in the day.

The dollar remained broadly supported after data on initial jobless claims released on Thursday pointed to an ongoing recovery in the labor market.

The Department of Labor reported that initial jobless claims fell by 4,000 to 294,000 last week, just slightly above expectations of 290,000. The upbeat report boosted the outlook for the U.S. recovery and raised expectations for a strong reading of the government nonfarm payrolls due later Friday.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, was down 0.17% at 92.39, not far from Thursday’s 12-year high of 92.76.

EUR/USD edged up 0.11% to 1.1805, but still remained within close distance of Thursday’s nine-year low of 1.1753.

The single currency remained under pressure after data on Wednesday showed that the annual rate of euro zone inflation fell by 0.2% in December, down from 0.3% in November. It was the first fall in the annual rate of inflation since October 2009.

The decline in consumer prices added to expectations that the European Central Bank could implement quantitative easing as soon as its next meeting on January 22.

Earlier Friday, data showed that French industrial production fell 0.3% in November, compared to expectations for a 0.3% rise. October’s figure was revised to a 0.7% decline from a previously estimated 0.8% drop.

Sterling eased off Thursday’s 18-month lows of 1.5032, with GBP/USD rising 0.28% to 1.5130.

The U.K. Office for National Statistics earlier reported that manufacturing production rose 0.7% in November, beating expectations for a 0.3% gain, after a 0.7% fall the previous month.

On the other hand, U.K. industrial production ticked down 0.1% in November, data showed on Friday, confounding expectations for an increase of 0.2%. October’s figure was revised to a 0.3% slip from a previously estimated 0.1% fall.

A separate report showed that the U.K. trade deficit narrowed to £8.85 billion in November from £9.84 billon in October, whose figure was revised from a previously estimated deficit of £9.62 billion. Analysts had expected the trade deficit to narrow to £9.40 billion in November.

Elsewhere, the dollar slipped lower against the yen, with USD/JPY down 0.24% to 119.35, while USD/CHF fell 0.11% to 1.0174.

The commodity-exposed Australian, New Zealand and Canadian dollars were broadly weaker, still hovering near multi-year lows. AUD/USD was steady at 0.8118, NZD/USD edged down 0.21% to trade at 0.7807 and USD/CAD added 0.14% to 1.1847.

The Australian Bureau of Statistics earlier reported that retail sales rose 0.1% in November, disappointing expectations for an increase of 0.2%, after a 0.4% gain in October.

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