Dollar drops to 3-week low as euro rises; US payrolls in focus

NEW YORK: The dollar fell to three-week lows on Thursday as strong German industrial orders boosted the euro while US data showed private sector jobs rose less than expected in June, weighing on the greenback along with nagging trade concerns.

In recent weeks, the dollar benefited from mounting trade tensions, said John Doyle, director of markets, at Tempus Consulting in Washington. "But we're seeing a reversal of those gains today and there are several reasons for that, such as what's happening in the euro zone."

He also cited "profit-taking and repositioning as we enter the new quarter as well."

In February, the dollar hit its lowest in more than three years, and has rallied nearly 7 percent since then.

The dollar briefly extended losses after minutes of the latest Federal Reserve meeting showed policy makers remained upbeat on the US economic outlook but worried about a trade war.

"The interpretation might be that the Fed's 'put,' if you will, seems to be evaporating...they're focused on their job which is going to require them to continue to raise interest rates until the data from the impact from the tariffs leads them to act otherwise," said Mark Luschini, chief investment strategist, at Janney Montgomery Scott in Philadephia.

"So I think the hurdle for any kind of pause in the rate hike cycle is quite high, and investors are realizing that."

Investors now are looking to Friday's US non-farm payrolls report.

In afternoon trading, the dollar index was down 0.2 percent at 94.467. Earlier, it had dropped to a three-week low.

The euro climbed after German industrial orders had a higher-than-expected jump in May following four monthly drops.

The euro also benefited as Washington has softened its trade rhetoric toward European Union carmakers.

The euro rallied to a three-weak peak and last changed hands at $1.1681, up 0.4 percent.

US data showed private payrolls increased last month, but were lower than forecast, while jobless claims rose unexpectedly last week.

This data weighed on the dollar, but the currency trimmed losses after a higher-than-expected US services index.

A deadline for Washington to impose tariffs on Chinese imports, set for July 6, has kept the market rangebound.