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Dollar steadies near three-week high ahead of U.S. payrolls data

06/04/2021 | 03:55am EDT

* Dollar index at three-week high

* Cryptocurrencies slip after Musk tweet

* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

LONDON, June 4 (Reuters) - The dollar index held near a three-week high on Friday and moves in currency markets were muted as traders waited for closely-watched U.S. non-farm payrolls data later in the session.

Currency investors are looking for indications of the strength of the U.S. economic recovery and the possibility of the Federal Reserve tightening its monetary policy, which is seen as positive for the dollar.

The consensus forecast for the data, due at 1230 GMT, is that about 650,000 jobs have been added in May.

The dollar rallied on Thursday, notching up its biggest daily gain in a month, after weekly U.S. jobless claims fell below 400,000 for the first time since the COVID-19 pandemic started more than a year ago and private payrolls increased by significantly more than expected.

At 0718 GMT, the dollar index was up 0.1% on the day at 90.542, having hit a new three-week high earlier in the session .

The euro was down 0.1% at $1.21155 versus the dollar .

"Yesterday's US dollar rally suggests an expectation of a strong beat on the headline number, as well as a big upward revision to the April number," said Michael Hewson, chief market analyst at CMC Markets UK in a note to clients.

"Anything less than a big beat on both could well see the US dollar slide back."

Positioning data shows investors heavily short dollars, leaving the market hypersensitive to any suggestion of a change in direction for the currency or a shift in the rates outlook.

Overnight implied dollar/yen volatility shot up to a month high above 8% on Thursday and euro/dollar implied volatility hit its highest since mid-March.

Foreign exchange strategists in a Reuters poll were almost evenly split on the dollar's near-term direction following two months of broad weakness, as they await clearer signs from policymakers.

The Australian dollar, which dropped to its lowest since April on Thursday, held near these lows, at 0.76665, up just 0.1% on the day.

The New Zealand dollar likewise was stuck near the previous session's lows, at 0.71545.

The Japanese yen changed hands at 110.195 versus the dollar .

China's yuan softened past the 6.40 level, having shrunk away from its three-year highs when China's central bank moved to limit the currency's gains earlier this week.

U.S. President Joe Biden signed an executive order on Thursday that bans U.S. entities from investing in dozens of Chinese companies with alleged ties to defence or surveillance technology sectors, a move his administration says expands the scope of a legally flawed Trump-era order.

Cryptocurrencies fell after a tweet from Tesla boss Elon Musk appeared to lament a breakup with bitcoin.

Tesla's big position in bitcoin and Musk's large personal following often set crypto markets on edge whenever he tweets.

At 0736 GMT, bitcoin was down 6.6% at around $36,600 , while ether was down 8% at around $2,627.

(Reporting by Elizabeth Howcroft and Tom Westbrook; editing by David Evans)

© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / CANADIAN DOLLAR (AUD/CAD) -0.17% 0.9257 Delayed Quote.-5.53%
AUSTRALIAN DOLLAR / EURO (AUD/EUR) -0.16% 0.62573 Delayed Quote.-1.04%
AUSTRALIAN DOLLAR / JAPANESE YEN (AUD/JPY) 0.21% 81.447 Delayed Quote.2.07%
AUSTRALIAN DOLLAR / NEW ZEALAND DOLLAR (AUD/NZD) -0.23% 1.05467 Delayed Quote.-1.33%
AUSTRALIAN DOLLAR / SWISS FRANC (AUD/CHF) -0.10% 0.67758 Delayed Quote.-0.91%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) -0.15% 0.7367 Delayed Quote.-4.47%
BITCOIN - EURO 0.41% 27544.44 Real-time Quote.16.30%
BITCOIN - UNITED STATES DOLLAR 0.37% 32453.21 Real-time Quote.11.95%
BRITISH POUND / AUSTRALIAN DOLLAR (GBP/AUD) 0.00% 1.86608 Delayed Quote.5.05%
BRITISH POUND / EURO (GBP/EUR) -0.17% 1.16795 Delayed Quote.3.91%
BRITISH POUND / NEW ZEALAND DOLLAR (GBP/NZD) -0.23% 1.96827 Delayed Quote.3.62%
BRITISH POUND / US DOLLAR (GBP/USD) -0.17% 1.37493 Delayed Quote.0.27%
CANADIAN DOLLAR / AUSTRALIAN DOLLAR (CAD/AUD) 0.16% 1.080217 Delayed Quote.5.86%
CANADIAN DOLLAR / EURO (CAD/EUR) -0.03% 0.676114 Delayed Quote.4.81%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -0.03% 0.7952 Delayed Quote.1.25%
CMC MARKETS PLC 1.81% 451 Delayed Quote.13.30%
DOW JONES FXCM DOLLAR INDEX 0.03% 11956.26 Delayed Quote.2.30%
EURO / AUSTRALIAN DOLLAR (EUR/AUD) 0.15% 1.59758 Delayed Quote.1.09%
EURO / NEW ZEALAND DOLLAR (EUR/NZD) -0.07% 1.68513 Delayed Quote.-0.31%
EURO / US DOLLAR (EUR/USD) -0.01% 1.1771 Delayed Quote.-3.46%
INDIAN RUPEE / AUSTRALIAN DOLLAR (INR/AUD) 0.15% 0.01823 Delayed Quote.2.56%
INDIAN RUPEE / EURO (INR/EUR) -0.02% 0.011403 Delayed Quote.1.57%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.00% 0.013432 Delayed Quote.-1.95%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.09% 0.69845 Delayed Quote.-3.07%
TESLA, INC. -0.91% 643.38 Delayed Quote.-7.99%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) 0.04% 6.4728 Delayed Quote.-0.38%
US DOLLAR / AUSTRALIAN DOLLAR (USD/AUD) 0.18% 1.357202 Delayed Quote.4.66%
US DOLLAR / EURO (USD/EUR) 0.00% 0.849538 Delayed Quote.3.59%
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