The U.S. dollar inched higher on Wednesday as fragile global sentiment kept demand for safe-haven assets intact, though gains remained modest ahead of the long-delayed U.S. jobs report due on Thursday.
At 04:15 ET (09:15 GMT), the Dollar Index—measuring the greenback against six major peers—was up 0.1% at 99.552, hovering near its highest level in a week.
Dollar supported by risk-off mood
Nervousness has gripped global equity markets this week amid renewed concerns about valuations in AI-exposed technology stocks, pushing investors toward U.S. Treasuries and, in turn, the dollar.
Market tension is likely to persist into the U.S. close, with Nvidia’s (NASDAQ:NVDA) earnings set to play a pivotal role in shaping sentiment given its central role in the AI trade.
“The magnificent seven tech stocks are around 7% off their highs – a drop in the ocean compared to the 70% rally since April. But the understandable fear is that this is a very crowded trade and that a casual walk to the exit could turn into something less orderly should cause be found,” analysts at ING wrote.
Adding to investor jitters are signs of cooling economic momentum. Weekly jobless claims data released Tuesday showed a sharp rise in the number of Americans receiving unemployment benefits between mid-September and mid-October.
The September nonfarm payrolls report—delayed by last month’s government shutdown—is scheduled for release on Thursday, and traders are watching for clues on labor-market tightness and wage pressures. A softer-than-expected print would likely reinforce expectations for a Federal Reserve rate cut.
“Tomorrow’s release of the delayed September jobs report will probably be the best chance for the dollar to go lower this week,” ING said. “Should the jobs data fail to swing the market towards a Fed cut in December (currently 50% priced), then pressure remains on equity markets.”
Pound slips after UK CPI slowdown
In Europe, EUR/USD dipped slightly to 1.1577, trading near a one-week low.
The eurozone’s final CPI reading, expected later in the session, is likely to confirm a slight moderation in October inflation—supporting expectations the European Central Bank will keep rates unchanged in December.
“Expect continued narrow ranges for EUR/USD, but a move sub 1.1560/65 could cause some intraday trouble,” ING noted.
GBP/USD edged 0.1% lower to 1.3136 after UK annual inflation eased in October, increasing the odds of a Bank of England rate cut next month. Consumer price inflation slowed to 3.6%, down from 3.8% and the lowest since May.
“We expect sterling to remain fragile heading into the Budget,” ING said.
Chancellor Rachel Reeves is expected to identify tens of billions in budget measures on Nov. 26 to meet the government’s fiscal commitments.
Yen hovers near nine-month low
In Asia, USD/JPY rose 0.1% to 155.67 after hitting a nine-month high in the prior session.
Long-term Japanese government bond yields continue to climb to multi-decade highs as investors question the sustainability of Japan’s expansionary fiscal stance. Both 10-year and 20-year yields have moved sharply higher.
USD/CNY ticked up to 7.1098, while AUD/USD dropped 0.4% to 0.6483 despite third-quarter wage growth holding steady—reinforcing expectations that the Reserve Bank of Australia will leave interest rates unchanged.