Trading was more subdued Thursday, ahead of the Friday U.S. jobs report for May, which is arguably the most important piece of economic data of the month. The key non-farm payrolls number is forecast to come in at up 160,000.
The euro declined on Thursday on the European Central Bank's cautious economic outlook, while oil prices recovered on a drop in U.S. crude inventories, erasing losses on OPEC's failure to reach a deal to set an output ceiling.
Investors now await Friday's payrolls report as they evaluate economic data to determine whether the Federal Reserve will hike interest rates as soon as its June 14-15 meeting.
The euro wallowed near a three-year low against the yen early on Friday, having been underwhelmed by the European Central Bank holding back fr om making material changes to its policy mix after a review.
The euro's decline kept the dollar index near a two-month peak, leaving it poised for a breakthrough should non-farm payrolls due later in the day bolster expectations for an imminent hike in U.S. rates.
The euro stood at 121.40 yen EURJPY=R, having been as low as 121.065 - a level not seen since April 2013. Against the dollar, it dipped back near $1.1150 EUR= after losing grip of the overnight high of $1.1221.
Federal Reserve Bank of Dallas President Robert Kaplan reiterated Thursday that he’s “getting to the point” wh ere he can support another increase in short-term rates.
It’s likely the data will have improved enough to boost rates at either the June or July central-bank policy meetings, Mr. Kaplan said. That is provided that the economy moves forward on a path of around 2% growth this year, with further declines in the jobless rate and signs that inflation pressures are beginning to rise back to the 2% target.
The biggest American banks will likely have to bulk up their balance sheets further to protect against possible financial shocks, Jerome Powell, Federal Reserve officials said Thursday.
The private sector added 173,000 jobs in May, payroll processor ADP said Thursday, possibly signaling that a government report will reveal tepid employment growth for a second straight month.
Filings for US unemployment benefits declined for a third consecutive week, signalling sustained firming in the labour market.
Jobless claims fell by 1,000 to 267,000 in the week ended May 28, a Labour Department report showed yesterday. The median forecast of economists surveyed by Bloomberg called for applications to edge up to 270,000.
The ECB nudged up its inflation forecast for 2016 but predicted price growth would remain below target through 2018 as depressed energy costs have held down prices of other goods and services.
The ECB has also raised its 2016 GDP and inflation estimates and emphasised that although the recovery is proceeding, it will be modest. In detail, the ECB left the main refinancing rate at zero, the rate on bank overnight deposits at -0.4 percent and the rate on the marginal lending facility at 0.25 percent. Rates will stay low for a long time, Mr Draghi said. He added that quantitative easing will last at least until March 2017, and could be extended until the inflation adjustment is not "significant."
The ECB also revised upwards its 2016 GDP estimates to 1.6 percent from 1.4 percent in March. For 2017 and 2018, a 1.7 percent growth is expected, unchanged compared with March. Inflation was also revised upwards: 0.2 percent in 2016 against the previous estimate of 0.1 percent. The slight improvement, said Mr Draghi, is due to the rise in oil prices. The inflation rate is expected to accelerate in 2017 to 1.3 percent and in 2018 to 1.6 percent. The ECB, Mr Draghi reiterated, "is ready to use all instruments available, if necessary, within the framework of our mandate" to raise interest rates in the eurozone.
The European Central Bank is ready for any outcome of the U.K.’s referendum to decide whether it will remain in the European Union, said Mario Draghi, president of the ECB.
The group of the world's major oil exporters failed to come to an output policy, with Iran insisting on the right to ramp up production.
Disappointed by OPEC's inability to clinch a deal addressing the global supply glut and sluggish demand, traders initially sold oil futures. Buying later emerged in reaction to government data showing a drop in U.S. oil inventories.
U.S. crude futures settled up 16 cents or 0.33 percent at $49.17 a barrel, while Brent oil futures settled up 32 cents or 0.64 percent at $50.04.
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