10-6-17 8:17 AM EDT | Email Article

By Barbara Kollmeyer, MarketWatch , Anneken Tappe

Dollar traders await nonfarm payrolls

The British pound extended losses on Friday, as speculation grew that a general election could be called in the U.K due to growing questions about whether Prime Minister Theresa May can hang on to her job.

Meanwhile, the U.S. dollar was rising as investors awaited fresh data on jobs growth.

Where are currencies trading?

The ICE U.S. Dollar Index , which measures the U.S. currency against six rivals, was little changed at 94.005. The WSJ U.S. Dollar Index , which is a broader measure of the greenback, gained 0.1% to 87.07.

The British pound was buying $1.3080, from $1.3118 late Thursday in New York, and was hovering at levels not seen since early September. Against the euro, the pound was off about 0.3%, with one euro buying GBP0.8950.

Read: Sterling has a long way to fall, as snap election risks mount in the U.K. (http://www.marketwatch.com/story/sterling-has-a-long-way-to-fall-as-snap-election-risk-mounts-in-the-uk-2017-10-05)

The euro was changing hands at $1.1708, down from $1.1711 late Thursday in New York.

The dollar rose against the Japanese yen , buying Yen112.99, compared with Yen112.82 late Thursday.

Against the Swiss franc , the dollar rose 0.2% to 0.9799 francs, versus 0.9782 francs late Thursday in New York.

What's driving the market?

Sterling is now set for a 2.5% weekly tumble, its biggest since the week ending Oct. 7, when the currency lost 4.1% against the dollar after a flash crash. That slide has come amid signs of a growing lack of confidence in May, partly after her "disastrous" speech (http://www.marketwatch.com/story/uk-leader-theresa-mays-slogan-literally-fell-apart-during-her-disastrous-speech-2017-10-04)at the Tory party conference on Wednesday. Continued gridlock with Brussels over negotiations around the U.K.'s exit from the European Union is also raising questions about the U.K. leader.

Check out:Sterling has a long way to fall, as snap election risk mounts in the U.K (http://www.marketwatch.com/story/sterling-has-a-long-way-to-fall-as-snap-election-risk-mounts-in-the-uk-2017-10-05).

For the dollar, investors will home in on Friday's release of nonfarm payrolls and unemployment data. The monthly jobs report is expected to give further clues to the likelihood of a December interest rate increase by the Federal Reserve. Analysts also expect some distortions from the impact of hurricanes Harvey and Irma. Nonfarm payrolls for September, the unemployment rate and average hourly earnings are all due at 8:30 a.m. Eastern Time.

For the euro, investors were looking at data that showed a surge in German manufacturing orders (http://www.marketwatch.com/story/german-manufacturing-orders-surge-in-august-2017-10-06-24853827)in August, which more than made up for an unexpected fall in July.

What are market participants saying?

On the pound, the fact that it's falling against the euro as well as the dollar means the problems are localized, wrote Jasper Lawler, head of research at LCG, in a note to clients.

"MPs' confidence in Theresa May is at a low point. But having made it through the poor election result, it would seem daft for her to quit, in effect because she had a cold. If May can hang on, the pound is due a correction of recent losses, at least against the euro," he said.

Lawler noted that the ICE Dollar Index hit a seven-week high in the Asian session on Friday. Expectations that fewer than 100,000 new jobs were created last month isn't denting the view that the Federal Reserve will lift rates in December, he said.

"It would probably need a contraction in the U.S. workforce in September to put off a Fed seemingly intent on its third rate increase this year," he added.

See:Hurricanes may make it look like U.S. 'lost' jobs for the first time since 2010 (http://www.marketwatch.com/story/hurricanes-may-make-it-look-like-us-lost-jobs-for-the-first-time-since-2010-2017-10-01)

What are the data saying?

Besides nonfarm payrolls, average hourly earnings and the overall unemployment data for September are also due at 8.30 a.m. Eastern.

Wholesale inventories for August will follow at 10 a.m. Eastern, and the data dump concludes with August consumer credit at 3 p.m. Eastern.

-Barbara Kollmeyer; 415-439-6400; AskNewswires@dowjones.com

 

(END) Dow Jones Newswires

10-06-17 0817ET

Copyright (c) 2017 Dow Jones & Company, Inc.
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