Dollar mixed ahead of ECB, jobs report

The European Central Bank is expected to raise the federal funds rate by 25 basis points Thursday, the same day U.S. employment data will be released.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Catherine Clifford, CNNMoney.com staff writer

When it comes to investing my money, I most trust:
  • Myself
  • A family member
  • A certified financial planner
  • "Issue #1" host Ali Velshi

NEW YORK (CNNMoney.com) -- The dollar was mixed against major currencies Wednesday, as investors await the European Central Bank's decision on interest rates and the latest unemployment numbers from the U.S. Department of Labor.

The euro was buying $1.58789, up from $1.57922 late Tuesday. The dollar bought ¥105.89, down slightly from ¥106.13 yesterday.

The European Central Bank is widely expected to raise the key federal funds rate by 25 basis points, according to Tom Benfer, director of foreign exchange at BMO Capital. The currency market is already "trading today based on a 25-basis-point increase tomorrow," he said.

If the ECB does in fact raise the key federal funds rate, that would strengthen the 15-nation euro and further weaken the dollar. However, there has been some uncertainty about what the ECB might say and do recently, says Benfer.

"The feeling was they would raise rates in July and that would be it for the end of the year," he said. "But now it appears they may raise rates again between July and the end of the year." That means investors will be closely reading the ECB's statement, looking for hawkish - favoring an increase in interest rates - language.

The ECB is singularly focused on controlling inflation with the euro, but finance ministers think about the economy in broader terms, says Benfer. "The finance ministers think the ECB has no need to raise rates," and that the central bank should "pay more attention to the economic growth," he said.

The difference in opinion between the ECB and the finance ministers is causing tension. "The pressure being applied by the finance ministers on the ECB is definitely increasing," said Benfer.

Economic news: A key unemployment report is due from the Department of Labor on Thursday. If the data continue to show erosion in the job market, it will increase pressure on the Federal Reserve bank to cut rates to support the economy, explained Benfer. However, rate cuts lead to inflation and a weaker greenback.

Economists surveyed by Briefing.com expect the unemployment rate to fall to 5.4% from 5.5% last month.

The National Employment Report from Automatic Data Processing (ADP) showed a 76,000 job drop for goods-producing businesses Wednesday morning - marking the 19th monthly decline in a row - and a 3,000 job decline in the services sector. Economists polled by Briefing.com had expected jobs to decline by 20,000 in June.

"After the ADP report today," which showed weaker-than-expected employment numbers, "if anything, the market is now expecting a more negative employment report," said Benfer.

The Commerce Department reported Wednesday that factory orders rose by 0.6% in May, less than half the gains turned in during April and March, reflecting slumping demand for autos, heavy machinery and steel.

The dollar declined on Tuesday as stronger-than-expected economic reports from Japan and Germany strengthened overseas currencies, amid further concerns about write-offs in the financial sector in the United States. To top of page

Track 17 major currencies

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More


Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.