NEW YORK: The dollar barely moved against a basket of currencies on Thursday, as investors awaited the release of US labor market data on Friday that could provide clues to the timing of the Federal Reserve's next move as it looks to normalize policy.
The US Dollar Currency Index, which measures the greenback against a basket of six currencies, was unchanged on the day, trading at 94.141, not far from the 1-year high of 94.504 touched last week.
Most major currency pairs clung to familiar ranges, with traders disinclined to place large directional wagers before a key data release.
"A rather typical pre-nonfarm payrolls lull has taken over the market today," said Michael Brown, senior analyst at payments firm Caxton in London.
"I think we'll probably range like this until the jobs report is out of the way, though even then any USD weakness should be faded given how a November taper looks near-certain," Brown said.
The Federal Reserve has said it is likely to begin reducing its monthly bond purchases as soon as November and then follow it up with interest rate increases, as the US central bank's turn from pandemic crisis policies gains momentum.
Friday's non-farm payrolls data is expected to show continued improvement in the labor market, with a forecast for 455,000 jobs to have been added in September, a Reuters poll showed.
Data that meet or beat the estimate would be generally viewed as keeping the Fed on track to begin tapering its asset purchases soon, while a big miss might be dollar negative, analysts said.
In the week following the data the dollar tends to reverse most of the gain or loss that has occurred from the day of the NFP release, FX strategists said in a BofA Global Research report on Thursday.
The number of Americans filing new claims for jobless benefits fell last week, but layoffs increased from a 24-year low in September in part as hospitals fired unvaccinated staff and lack of workers forced closures of facilities.
Sterling rose 0.3% on Thursday as global risk sentiment improved a tad and analysts said the prospects of a Bank of England rate hike reduced some downside potential for the currency.
In the digital currency space, bitcoin, the world's biggest cryptocurrency by market value, eased from the almost five-month high of $55,800 touched on Wednesday, last trading at around 54,585.59.
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