Forex Traders - Dollar falls as market braces for jobs report, eyes Syria

Forex Traders - Dollar falls as market braces for jobs report, eyes Syria

Submitted by caseyb23 on Thu, 09/05/2013 - 03:24

Dollar falls as market braces for jobs report, eyes Syria

Investing.com – The dollar fell against most major currencies on Wednesday as investors avoided the greenback over uncertainty surrounding a possible U.S. military strike against Syria.

In U.S. trading on Wednesday, EUR/USD was up 0.28% at 1.3208.

The U.S. Senate Foreign Relations Committee on Wednesday gave President Barack Obama authority to use military force against Syria for its alleged use of chemical weapons in its civil war.

U.S. President Barack Obama asked Congress for the green light to begin limited strikes against Syria though he said earlier Wednesday that he does not need approval to strike, which softened dollar demand.

Separately, Russian President Vladimir Putin said he might support a U.N. Security Council resolution calling for military strikes provided that body was presented with conclusive proof that the Syrian government employed chemical weapons.

Putin insisted the U.S. had no right to strike Syria, a Russian ally, adding only the U.N. can authorize such a measure.

Investors remained eager for the release of Friday's U.S. nonfarm payrolls report, which is seen as a tipping point over whether the Fed will begin tapering asset purchases this month.

Many investors expect the Federal Reserve to announce plans to unwind its USD85 billion monthly bond-buying program at its Sept. 17-18 policy meeting.

Monthly asset purchases weaken the dollar to spur recovery, though investors avoided the currency on Wednesday before more definitive steering currents appear likely by Thursday or Friday as the release of the August jobs report draws closer.

Elsewhere, the U.S. Commerce Department reported that the U.S. trade deficit widened more than expected in July, hitting USD39.1 billion from a downwardly revised USD34.5 billion deficit in June, mainly due to improving imports.�

Analysts were expecting the trade deficit to widen to USD38.7 billion in July.�

The greenback was down against the pound, with GBP/USD up 0.43% at 1.5628.

The Markit U.K. services purchasing managers' index rose to 60.5 in August, the highest since December 2006, from 60.2 in July. The numbers defied consensus forecasts, as analysts were calling for a decline to 59.0.

The report, which came a day before the Bank of England unveils its latest decision on interest rates, said new business grew for the eighth successive month and added the latest increase was the largest seen in more than 16 years, fueling expectations that U.K. recovery is gaining steam.

The dollar was up against the yen, with USD/JPY up 0.07% at 99.64, and down against the Swiss franc, with USD/CHF trading down 0.11% at 0.9356.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.41% at 1.0491, AUD/USD up 1.21% at 0.9171 and NZD/USD trading up 1.45% at 0.7913.

Australia's economy grew 0.6% in the second quarter, in line with market forecasts.�

Separately, the Bank of Canada held its benchmark interest rate at 1% as expected by markets.�

The bank added that current monetary policy remains appropriate as an expected rotation of demand to exports and investment is experiencing delays.�

Canada's trade deficit widened to CAD0.9 billion in July from an upwardly revised deficit of CAD0.4 billion in June, confounding expectations for the deficit to widen to CAD1 billion.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.28% at 82.15.

On Thursday, the U.S. is to release the ADP nonfarm payrolls report on private-sector job creation, as well as the weekly government report on initial jobless claims.