The U.S. dollar maintained a mixed performance versus major rivals Thursday, leaving a closely followed index in negative territory after minutes of the Federal Reserve’s June meeting showed policy makers fretting over intensifying trade disputes but not inclined to put planned rate increases on pause.
Read: Fed increasingly worried about spillovers from trade but shows no sign of pausing rate hikes
Earlier, news reports that the U.S. had proposed zero tariffs on auto imports and exports between the U.S. and the European Union sparked gains for equities and other assets viewed as risky, allowing the buck to recover ground versus the Japanese yen, which is traditionally viewed as a haven, while serving to lift the euro, analysts said.
The dollar held on to a small advance versus the yen but remained weaker versus most major rivals after Automatic Data Processing Inc. reported that employers added 177,000 private-sector jobs in June. The data is watched for clues to official employment data, though its record as a predictor is viewed as shaky. Separately, the Labor Department said first-time jobless claims hit a six-week high, but layoffs remain near a multidecade low.
Moreover, investors have started to pay closer attention to wage data in the official jobs report, as they search for signs of accelerating pay raises that could feed inflation and persuade the Fed to raise rates more aggressively than anticipated. The June jobs report is due at 8:30 a.m. Eastern Friday.
Read: Just because the economy is booming doesn’t mean that all is well
While no deal has been announced, both sides want to avoid a full-scale trade war that could dent the global economic recovery, said Boris Schlossberg, managing director of FX strategy at BK Asset Management, in a note.
That said, “the specter of trade war” still hangs over the market, he said, noting that tariffs on $34 billion in Chinese goods are due to take effect Friday, leaving investors to anticipate how Beijing will retaliate. That could end up overshadowing any news from Friday’s jobs data.
Read: No snoozing as stock-market investors await crucial 24 hours
Overall, trading is expected to remain relatively muted as some U.S. investors extend the midweek Fourth of July break. U.S. markets were closed Wednesday in observance of the holiday.
The ICE U.S. Dollar index DXY, -0.14% was down 0.3% at 94.406.
The euro EURUSD, -0.0086% last bought $1.1691, up slightly from $1.1657 late in the previous session after earlier trading above $1.17. The U.S. currency rose 0.1% versus its Japanese counterpart USDJPY, +0.01% to fetch 110.63 yen.
Industrial orders in Germany, the largest economy in Europe’s trading block, came in stronger than expected in May to support expectations of an economic upturn. The reported showed a 2.6% rise in orders.
Read: European stocks drive higher, as tariff hopes rev up car makers
Also read: How will investors know if there is a full-blown trade war? Here’s what Wall Street says
Also on the data front, the Institute for Supply Management’s survey of service-oriented companies produced an index reading of 59.1% in June, up from 58.6% a month earlier, reflecting a surge in growth that helped push the U.S. economy to fresh heights. A reading of at least 50 indicates improving conditions.