Dollar dips


    LONDON- As risk assets recovered, the safe-haven US dollar dipped, retracing gains made on safe-haven demand following a Labor Department report that job growth slowed further in August, threatening the economy’s recovery from the COVID-19 pandemic.

    Employment slowed and permanent job losses increased as programs to help businesses pay wages have lapsed or are on the verge of ending. Economists credited government largesse for the sharp rebound in economic activity after it nearly ground to a halt following the shuttering of businesses in mid-March.

    The dollar index rallied to its highest in a week following the report. But those gains were erased on Friday afternoon as US stock indexes recovered after earlier hitting their lowest level in a month.

    The dollar index was lower on the day, last trading down 0.10 percent at 92.752, though it remains 1.1 percent higher than the April 2018 low of 91.74 on Tuesday after the US central bank overhauled its policy framework last week, which would allow it to keep rates lower for longer periods, a negative for the dollar.

    Investors see a downward trajectory for the dollar in the longer term.

    “Dollar rallies are going to be faded unless there is a major surprise on the risk front,” said Mazen Issa, senior foreign exchange strategist at TD Securities.

    The dollar’s downtrend will continue for at least another three months due to the outlook for the Fed’s monetary policy, a Reuters poll of analysts showed on Friday.

    The drop in the dollar at the start of the week pushed the euro above the key $1.20 level for the first time since 2018. But those gains quickly faded after European Central Bank chief economist Philip Lane said the eurodollar exchange rate “does matter” for monetary policy, suggesting the euro’s rise had come too fast and strong for the ECB’s liking.