NEW YORK- The dollar slipped against a basket of currencies on news of steady US business activity in November, but private sector employment declined in line with expectations for a fourth-quarter economic slowdown.
Currencies traded in a relatively narrow range with US markets closing early the day after the US Thanksgiving holiday.
“It’s incredibly quiet, as you’d expect on the day after Thanksgiving, with liquidity still pretty thin, and volumes again on the light side,” said Michael Brown, market analyst at Trader X in London.
“I think what we’re seeing is a classic case of the market taking the ‘path of least resistance.’”
S&P Global said on Friday its flash US Composite PMI Output Index was unchanged at 50.7 this month as a modest rise in services sector activity offset a contraction in manufacturing. A reading above 50 indicates expansion in the private sector.
The lack of strong order growth resulted in businesses shedding workers, with the survey’s employment index dropping to 49.7 in the first contraction since June 2020 from 51.3 in October.
An easing labor market will aid the Fed’s fight against inflation.
“Economic data have been producing a fair amount of evidence of a cyclical downturn in the US,” Jane Foley, senior FX strategist at Rabobank said in a note.
The dollar index which measures the US currency with six peers, eased 0.4 percent to 103.35 , staying close to the 2-1/2 month low of 103.17 touched earlier this week. For the week, the index was down 0.5 percent , after slipping 1.9 percent last week.
The index is on course for its weakest monthly performance in a year on growing expectations the Federal Reserve is done with raising interest rates and could start cutting them next year. – Reuters
