The Friday US payroll release will inevitably be very important for interest rate expectations and near-term dollar direction. A further large employment fall would undermine trigger a renewed downward lurch in confidence.
The dollar pushed to highs near the 1.5510 level on Thursday in early US trade, but the dollar was unable to sustain the gains and weakened back to 1.57 on Friday
The US data was mixed and had a net negative impact on the UIS currency. Initial jobless claims rose strongly to 407,000 in the latest week from a revised 369,000 the previous week which increased fears over the US labour market. The claims data will certainly restrain optimism ahead of Fridays payroll report.
In contrast, the PMI index for the services sector rose slightly to 49.6 from 49.3 the previous month. Although still below the 50.0 expansion threshold, the data will provide some optimism that further major near-term deterioration can be avoided, especially as the fiscal and monetary actions will not yet have had any significant impact on the economy. Markets were still leaning towards a 0.25% rate cut at the next Fed meeting rather than a 0.50% move.