Dollar turns negative ahead of U.S. payrolls data

NEW YORK (Reuters) - The dollar fell from two-week highs on Thursday, as investors booked profits on the currency’s gains this week before Friday’s U.S. nonfarm payrolls report for April, which could show massive job losses amid a COVID-19 pandemic that has ravaged the global economy.

FILE PHOTO: George Washington is seen with printed medical masks on the one Dollar near Euro banknotes in this illustration taken, March 31, 2020. REUTERS/Dado Ruvic/Illustration

The greenback gave up gains against the euro and the Swiss franc and pared its rise versus the yen. Against commodity currencies such as the Australian and Canadian dollars, the U.S. unit extended its losses.

Over the week, the dollar index was up 0.9%.

“My sense is that it’s a case of profit-taking on the dollar’s outperformance this week ahead of tomorrow’s jobs report,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

“We’re just in a lull, and it’s a good time to take profits off the table ahead of what is expected to be a historically bad jobs report,” he added.

The U.S. economy is expected to have lost about 22 million jobs last month, with an unemployment rate of 16%, according to a Reuters poll.

On Thursday, data showed millions more Americans took unemployment aid from the government in the latest week.

U.S. weekly jobless claims totaled a seasonally adjusted 3.169 million for the week ended May 2, down from a revised 3.846 million in the prior week. Economists polled by Reuters had forecast 3.0 million claims in the last week.

The dollar held its gains after the data.

In afternoon trading, the dollar index fell 0.3% to 99.884 =USD, below a two-week high touched earlier in the session of 100.40.

The dollar pared gains against the yen, and was last up 0.2% at 106.315 yen JPY=EBS. It fell 0.1% against the Swiss franc to 0.9733 franc CHF=EBS.

After trading lower for most of the session, the euro recovered to trade 0.3% higher at $1.0825 EUR=EBS. The euro earlier dropped to a two-week low of $1.0767.

The single European currency had weakened on nagging concern over the direction of the European Central Bank’s stimulus scheme following a German court ruling earlier this week.

Sterling also rose 0.3% against the dollar at $1.2373 GBP=D3 amid the Bank of England's decision to leave interest rates unchanged and hold off on more stimulus.

In emerging markets, Turkey's lira fell to a record low of 7.25 per U.S. dollar TRY=, after traders interpreted comments from a Federal Reserve policymaker as ruling out a Fed swap line to cushion Ankara's depleted reserves.

The dollar was last down 1.1% versus the lira at 7.1096.

Stronger-than-expected Chinese export numbers lifted hopes in global markets that China can rebound quickly and help global growth recover from a coronavirus-induced shock. Chinese exports rose 3.5% despite expectations of 15.7% drop, helping to lift the Chinese yuan CNH=EBS in the offshore market and the Australian dollar. The yuan was last up 0.5% at 7.0927 per U.S. dollar.The Aussie dollar last traded up 1.4% at US$0.6492 AUD=D3, while the Canadian dollar rose 1.2% to C$1.3975 CAD=D3 per U.S dollar.

Reporting by Gertrude Chavez-Dreyfuss; Editing by Bernadette Baum and Jonathan Oatis