The dollar rose against the yen and the euro on Tuesday, tracking gains in U.S. equities after a report on August manufacturing eased fears of a steep decline in economic activity. Earlier in the session the yen pushed higher as a decline in European
The European currency fell for a second straight day, weighed down partly by trouble at German banks with hefty exposure to U.S. sub prime mortgage debt, the origin of broader problems in credit markets. That has injected uncertainty into the path of euro zone interest rates. The latest Reuters poll gave a median 40 percent chance of a rate hike when the European Central Bank meets on Thursday.
The ECB last raised rates in June, to 4.0 percent from 3.75 percent, and was widely expected to tighten policy again this month until the latest flare-up of market volatility. In the United States, markets are pricing in a quarter-percentage-point cut to the 5.25 percent federal funds rate when the Federal Reserve meets on Sept. 18. Last week, they were bracing for a half-point cut. "The big question remains: 'What is the Federal Reserve going to do? Are they going to cut the rate and by how much?' Until we get the answer, the dollar is going to be trading in a range," said Gregory alvaggio, senior currency trader at Tempus Consulting in Washington.
Key for markets will be Friday's August U.S. employment report, expected to show 110,000 new jobs added, above July's 92,000 gain. Schlossberg said a report that comes in below 100,000 would stoke fears that the housing slump and credit crisis has started to cost jobs. "I think the market may be too sanguine about the possibility of much worse growth," he said.
The Dollar traded around the levels of 1.3610 vs. the Euro ,116.25 against the Yen and 2.0145 against the Sterling at 20:03(GMT).
| USD/CHF | GBP/USD | USD/JPY | EUR/USD | |
| 1.2235 | 2.021 | 117.65 | 1.3815 | |
| Resistance | 1.2215 | 2.0195 | 117.2 | 1.372 |
| 1.2155 | 2.0155 | 116.75 | 1.3675 | |
| 1.2105 | 2.0075 | 115.4 | 1.355 | |
| Support | 1.2075 | 2.0045 | 115.2 | 1.345 |
| 1.199 | 1.996 | 114.6 | 1.3365 |
Today's Economic Events
| Date | Country | Event | Period | Previous | Forecast | Significance |
| 07:55 GMT | EUR | German Services PMI | Aug | 58.5 | 58.2 | 2 |
| 08:00 GMT | EUR | Services PMI | Aug | 57.9 | 57.9 | 2 |
| 08:30 GMT | GBP | Services PMI | Aug | 57 | 56.5 | 3 |
| 09:00 GMT | EUR | Retail Sales m/m | Jul | 0.40% | 0.40% | 2 |
| 12:15 GMT | USD | ADP Nonfarm Employment Change | Aug | 48K | 82K | 2 |
| 13:00 GMT | CAD | Interest Rate Statement | Sep | 4.50% | 4.50% | 4 |
| 14:00 GMT | USD | Pending Home Sales m/m | Jul | 5.00% | -2.00% | 2 |
