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EUR/USD posts modest gains, ahead of critical U.S. jobs report

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Shutterstock photo - -- EUR/USD posted modest gains on Thursday, as disappointing manufacturing data around the world weighed on the major currencies resulting in heightened fears of an impending global recession.

The currency pair traded between a low of 1.1136 and a high of 1.1208, before settling at 1.1193, up 0.0017 or 0.15%. The euro has now closed up higher against the dollar in four out of the last five and six of the last eight sessions. Over the last month of trading, the euro is relatively flat against its American counterpart down by 0.15% since September 1.

EUR/USD likely gained support at 1.1086, the low from Sept. 3 and was met with resistance at 1.1442, the high from Sept. 17.

On Thursday morning, The Institute for Supply Management said its index of National Factory Activity fell to 50.2 last month, below expectations for a reading of 50.5. Although any reading above 50 indicates expansion, the index fell to its lowest level since May, 2013. It followed downbeat reports in overnight trading, as manufacturing data in China fell 0.1 to 47.2 in September, its lowest level in six and a half years. The manufacturing sectors in Germany and the U.K., as well as the euro zone as a whole expanded at a slower rate than expected last month. Factory activity in France, meanwhile, rose faster than its estimated pace.

Currency traders were hesitant to make any major moves ahead of Friday's critical U.S. jobs report for the month of September. The U.S. Department of Labor said on Thursday that initial jobless claims rose by 10,000 last week to 277,000. Although weekly jobless claims rose at a slightly higher rate than expected, they still remain near 15-year lows. The four-week average fell by 1,000 to 270,750, approximately 5,000 below its level from late-August.

Friday's report is expected to show that the economy added 203,000 non-farm payrolls last month, up from a subpar gain of 173,000 in August. After falling sharply to 5.1% in August, the unemployment rate is expected to hold steady in September. Average hourly earnings are expected to tick up by 0.2% after surging by 0.3% in August.

The U-6 unemployment rate, a broader gauge of the employment situation in the U.S., fell 0.1% in August to 10.3%. The rate, which is a preferred measure of unemployment by Fed chair Janet Yellen, tracks the number of workers marginally attached to the labor force as well as part-time workers. Marginally attached workers are defined as those who are not working or not looking for work, but have looked for work over the last 12 months. At the height of the financial crisis, the U-6 rate peaked at 17%.

In its September monetary policy statement, the Federal Open Market Committee indicated that it would like to see improvements in the labor market before it raises short-term interest rates. A rate hike is viewed as bullish for the dollar, as foreign investors pile into the greenback to capitalize on high-yield bearing assets.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, reached near one month highs on Thursday at 96.64, before closing at 96.29, down more than 0.15% on the session. offers an extensive set of professional tools for the financial markets.

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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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