Dollar gains on safe-haven demand ahead of March jobs report

Investing.com - Investing.com - Investors snapped up safe-harbor dollar positions on Thursday ahead of the release of the March jobs report on Friday, while a mixed bag of economic indicators suggested the U.S. economy continues improving and will require less support from the Federal Reserve.

In U.S. trading on Thursday, EUR/USD was down 0.37% at 1.3716.

The Labor Department on Friday will release the March jobs report, and investors jumped into the safety of the dollar on Thursday to await the data.

Many are hoping the nonfarm payrolls data will shed light as to how U.S. recovery is unfolding and indicate how fast the Federal Reserve will unwind its bond-buying program that has weakened the greenback since late 2012.

Elsewhere, the Labor Department reported earlier that the number of individuals filing for unemployment assistance last week increased by 10,000 to 326,000 from the previous week's revised total of 310,000.

Analysts had expected jobless claims to rise by 7,000 to 317,000 last week.

Meanwhile, the Institute of Supply Management said its non-manufacturing purchasing managers' index rose to 53.1 in March from 51.6 in February, just slightly short of expectations for a reading of 53.5, though still an improvement nonetheless.

A separate report showed that the U.S. trade deficit unexpectedly widened to $42.3 billion in February from a deficit of $39.28 billion the previous month.

Analysts had expected the U.S. trade deficit to narrow to $38.5 billion.

Investors digested the data and determined the numbers still point to an economy that is improving, and only the pace of recovery remains up in the air.

Meanwhile in Europe, the European Central Bank left its benchmark interest rate unchanged at a record-low 0.25%, held its marginal lending rate at 0.75% and left its deposit facility rate unchanged at zero.

The bank predicted a prolonged period of low inflation in the euro zone, followed by a gradual upward movement, ECB President Mario Draghi said, adding that inflation should pick up slightly in April and gradually increase in 2015.

Draghi added that monetary authorities did not exclude further monetary policy easing and reiterated the ECB's forward guidance that interest rates will remain at their current levels, or lower, for an extended period.

He added the ECB's governing council was "unanimous" in its commitment to using all unconventional instruments within its mandate to ward off deflationary pressures and added that the bank discussed the possibility of negative deposit rates, which softened the euro.

The dollar was up against the yen, with USD/JPY up 0.03% at 103.91, and up against the Swiss franc, with USD/CHF up 0.55% at 0.8914.

The greenback was up against the pound, with GBP/USD down 0.20% at 1.6592.

Industry data released earlier revealed that the U.K. service-sector purchasing managers' index fell to 57.6 in March from 58.2 in February, missing analysts' expectations for a 58.1 reading, which softened the pound against the greenback.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.01% at 1.1033, AUD/USD down 0.24% at 0.9226 and NZD/USD down 0.37% at 0.8541.

The USD/JPY, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.30% at 80.62.

On Friday, the dollar will move on the government nonfarm payrolls report and unemployment rate.

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