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US dollar dips ahead of key US jobs report
[NEW YORK] The US dollar slipped on Thursday as investors awaited the US February jobs report for signals on the future path of Federal Reserve interest rate increases.
Analysts blamed profit-taking for some of the greenback's slippage, while a batch of US economic data, including a rise in factory orders and a weaker than expected slowdown in the services sector, supported the idea that the economy is on a steady growth path.
The dollar traded at US$1.0957 per euro around 2200 GMT, down from US$1.0865 at the same time Wednesday.
"The dollar, which hit a one-month trade-weighted high yesterday, benefited this week from largely positive US economic reports, which helped assuage worries about a looming recession in the world's number-one economy," said Omer Esiner of Commonwealth Foreign Exchange.
Friday's February jobs report is the most important piece of economic news on this week's calendar.
Analysts forecast job growth picked up to 190,000 net new payrolls and the unemployment rate held unchanged at 4.9 per cent.
"Another strong payrolls report tomorrow would likely go a long way in bolstering confidence in the US economy and could nudge market expectations for Fed policy tightening this year higher - a broadly positive scenario for the greenback," Mr Esiner said.
The Fed's policy arm, the Federal Open Market Committee, is not expected to raise the benchmark federal funds rate at its March 15-16 policy meeting, after hiking it from a seven-year low near zero in December.
But David Song, currency analyst at DailyFX, said that if the jobs data shows signs of "sticky" wage growth, that "may encourage the FOMC to implement higher borrowing costs over the coming months as Chair Janet Yellen remains confident in achieving the 2.0 per cent inflation-target over the policy horizon."