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Dollar Edges Lower as Labor Data Falls Short

By Yasin Ebrahim

Investing.com – The U.S. dollar was flat Tuesday as traders weighed weaker-than-expected labor data against positive remarks from Federal Reserve Chairman Jerome Powell on the economy.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.09% to 98.63.

"We’ll be watching this (coronavirus impact) carefully," Powell told lawmakers on the House Financial Services Committee.

But the Fed chief stopped short of hinting that any imminent action was needed, claiming he wanted to "resist the temptation to speculate" about the potential disruptions from the outbreak.

"'What will be the effects on the U.S. economy?' 'Will they be persistent?' 'Will they be material?' That’s really the question," Powell said.

The Fed's current wait-and-see approach has continued to attract criticism, not least from President Donald Trump who continues to call on the central bank to cut rates.

Traders are still pricing in a rate cut for the back end of the year, according to Investing.com's Fed Rate Monitor Tool.

In the lead-up to Powell's testimony, traders had to contend with softer labor market.

The U.S. Labor Department's latest Job Openings and Labor Turnover Survey (JOLTS) report, a measure of labor demand, showed job openings in January fell to about 6.43 million, missing expectations of 7 million.

The pound, meanwhile, continued to climb, keeping the dollar on the back foot following data showing the U.K. economy did not contract further in the fourth quarter of the year.

GBP/USD rose 0.33% to $1.2955.

EUR/USD gained 0.06% to $1.0915, with European Central Bank President Christine Lagarde adding to the chorus of calls for EU members to adopt more supporter fiscal measures.

More supportive fiscal measures, particularly from Germany, the powerhouse of the EU, will likely underpin growth in the economic bloc and support the single currency.

"A potential shift to a looser fiscal policy stance in Germany could ultimately turn out to be more supportive for the euro further down the line," MUFG said in a note.

USD/JPY added 0.03% to Y109.78 and USD/CAD slipped 0.20% to C$1.3291, with the latter getting a boost from a rebound in oil prices on hopes that Russia may consider backing OPEC+ proposals for deeper production cuts.

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