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Dollar Struggles to Make Headway as Economic Worries Weigh

Investing.com - The U.S. dollar edged higher on Thursday, but struggled to make headway amid persistent concerns over fresh indications of a slowdown in the U.S. economy and a broadening of global trade frictions.

Data on Wednesday showed that U.S. private sector hiring cooled in September, the latest indication that the trade dispute between Washington and Beijing is hurting the world's largest economy.

That added to fears sparked on Tuesday when a report showed U.S. factory activity contracted to its lowest level in more than a decade.

"Markets are beginning to look at the U.S. economy with a bit more concern," said Han Tan, a market analyst at brokerage FXTM in Kuala Lumpur.

"The fear now is that the manufacturing slowdown in the global economy is feeding back into the U.S. as well," he said.

"Bigger alarm bells would sound off if we started to see a bigger slowdown from U.S. consumers," Tan added, noting investors' attention would now turn to Friday's U.S. jobs data for a fuller picture of the economy's health.

Adding to trade concerns, the U.S. won approval on Wednesday to levy tariffs on $7.5 billion worth of European goods over illegal subsidies handed to Airbus, threatening to trigger a transatlantic trade war.

The dollar was slightly higher against the safe haven yen, edging up to 107.23 by 03:30 AM ET (07:30 GMT), slightly above one-week lows of 106.97 reached overnight.

The dollar was a touch lower against the euro at 1.0951.

Against a basket of currencies the U.S. dollar index ticked up to 98.78.

The British pound dipped to 1.22288 after fluctuating in a tight range as British Prime Minister Boris Johnson proposed an all-island regulatory zone in Ireland in his final pitch for a Brexit deal before the end of the month.

Sterling's outlook, however, remained uncertain after a cool response to the proposal from Brussels, leaving a no-deal exit from the European Union on Oct. 31 a real possibility.

"The question appears to be whether there is enough middle ground for the two sides to come to some sort of agreement by the time of the EU Summit on Oct. 17," said Rodrigo Catril, senior FX strategist at National Australia Bank in Sydney.

--Reuters contributed to this report

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