US Markets

BUZZ-COMMENT-US jobs, debt gloom pressure dollar toward pandemic lows

Credit: REUTERS/MIKE SEGAR

The dollar index probed last week's 92.54 two-year low after ADP [nAQN02XH8H] and ISM non-manufacturing employment data [nN9N26W01B] raised doubts about Friday's non-farm payrolls, and a hefty government borrowing slate foreshadowed steeper losses.

Aug 5 (Reuters) - The dollar index probed last week's 92.54 two-year low after ADP and ISM non-manufacturing employment data raised doubts about Friday's non-farm payrolls, and a hefty government borrowing slate foreshadowed steeper losses.

While this week's overall ISM indexes lifted recovery hopes, fresh seven-year lows in TIPS yields and staggering Treasury supply don't bode well for the dollar.

For the moment, though, the U.S. currency was getting off easy, its losses being stalled by EUR/USD -- the index's primary component -- holding just below its 1.1908 pandemic peak thus far.

Record high IMM net spec long EUR/USD positions last week and lingering oversold dollar techs created a headwind for dollar bears ahead of Thursday's jobless claims and Friday's monthly employment reports.

The dollar's recent role as global risk-funding currency, due to Fed largesse , may be tested temporarily by rebounding Treasury yields, though that appeared premised partly on the unexpectedly large Treasury refunding announcement.

Higher "risk-free" yields can support the dollar, but only if they are rising due to Fed rate-hike expectations based on stronger economic growth prospects, and not just higher inflation and government spending.

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Charthttps://tmsnrt.rs/3ibI55Q

(Randolph Donney is a Reuters market analyst. The views expressed are his own.)

((randolph.donney@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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