The dollar settled into a tight range early Friday in Europe ahead of the all-important monthly employment report, at the end of a week in which the economic data has suggested the clear slowdown in the global economy isn’t sparing the U.S.
According to Investing.com’s Fed Rate Monitor Tool, the implicit odds of a further rate cut at the Fed’s policy meeting later this month have surged this week to over 90% from barely 54% seven days ago.
Consequently, the dollar index, which tracks the greenback against a basket of six developed market currencies, has fallen by around 0.8% since the start of the week. By 3:30 AM ET, it was at 98.588, effectively unchanged from late Thursday.
“While the non-farm figure tends to be volatile, the employment indices in the PMI and the ISM reports do not look encouraging (and actually signal that jobs growth was even lower than our expectation of 100,000),” said Danske Bank Christin Tuxen in a morning note. “A weak jobs report will likely add fuel to the repricing of the Fed seen this week.”
The dollar is also starting to show signs of weakness amid the growing storm of impeachment proceedings against President Donald Trump, who on Thursday publicly and repeatedly urged China to investigate the Biden family for criminal activity in an intervention that appeared to meet any reasonable definition of seeking foreign intervention in the 2020 election.
In Europe, meanwhile, the British pound stabilized somewhat after the EU gave the U.K. a week to improve its proposals for tweaking the withdrawal agreement that is supposed to guarantee a smooth Brexit at the end of the month.
The pound was at $1.2334, set for a gain of around half a percent over the week. It’s also up around 0.2% against the euro on the week, at 1.1244.