The dollar trod water on Friday as traders awaited a closely watched monthly U.S. labor market report that should provide clues as to whether the world's biggest economy will bounce back after a lackluster second quarter.
On Friday it inched down 0.1 percent to 95.676, having hit a five-week low of 95.003 at the start of the week.
Sterling edged up 0.2 percent to $1.3128 GBP=D4, finding a foothold after a 1.6 percent fall on Thursday after the Bank of England surprised markets with a larger-than-expected monetary stimulus package.
A strong NFP reading could help the dollar by reviving expectations that the Fed could raise interest rates by year-end - a scenario that had been discarded in the days that followed Britain's shock vote to leave the European Union in June.
U.S. employment likely increased at a healthy clip in July, with wages picking up, which should help to underpin consumer spending and boost the economy.
The Labor Department's closely-watched employment report on Friday will probably show that nonfarm payrolls increased by 180,000 jobs last month, according to a Reuters survey of economists. While that would be a step down from June's 287,000 surge, July's expected gain would still be above the average monthly advance of 171,500 jobs over the first half of the year.
Pointing to labor market strength, the unemployment rate is forecast to have dropped one-tenth of a percentage point to 4.8 percent. In addition, average hourly earnings are expected to have increased 0.2 percent after edging up 0.1 percent in June. That would keep the year-on-year gain at 2.6 percent.
"As the labor market continues to tighten, I think we will see wage growth further accelerate," said Gus Faucher, deputy chief economist at PNC Financial Services Group in Pittsburgh. "Consumers are driving economic growth right now and one of the reasons is that wage growth has gotten a bit stronger."
German data on Friday showed an unexpected fall in June industrial orders from the European powerhouse, and oil prices stumbled again, falling 1 percent on fresh signs of weakening demand from China CLc1.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were trading at $41.50 per barrel at 0652 GMT, down 43 cents, or over 1 percent, from their last close.
International Brent crude futures LCOc1 were trading at $43.77 per barrel, down 52 cents, or 1.15 percent.
Oil prices fell by 1 percent on Friday as a crude and refined product glut weighed on markets and investors eyed a possible stutter in China's imports, ending a two-day short-covering rally.
BMI Research said China's imports were weakening from records set in 2015 and this year.
Reference: Reuters
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