Dollar weakens modestly amid risk flows, markets to remain choppy ahead of NFP

US Senate Republican Leader Mitch McConnell offered a temporary solution to the debt limit crisis to avoid a default and provided a boost to risk sentiment late Wednesday. Reflecting the improving mood, major equity indexes in Asia closed in the positive territory and the greenback seems to be having a difficult time finding demand in the early trading hours of the European session.

US data: The monthly data published by the Automatic Data Processing (ADP) Research Institute revealed on Wednesday that private sector employment in the US rose by 568,000 in September, beating the market expectation of 428,000. On Thursday, the US Department of Labor will release the weekly Initial Jobless Claims data, which is likely to be ignored by market participants ahead of Friday’s critical September jobs report.

Energy crisis: Reuters reported that Russian President Vladimir Putin announced that they will be ramping up gas output to ease the pressure on energy prices. The barrel of West Texas Intermediate (WTI) lost 2.7% on Wednesday and continues to push lower on Thursday.

Wall Street: After starting the day on the back foot, the S&P 500 Index managed to gain 0.4% by the closing bell, the Dow Jones Industrial Average rose 0.3% and the Nasdaq Composite added 68 points, or 0.47%. Currently, US stock index futures are up between 0.4% and 0.8%.

EUR/USD posted its lowest daily close since July 2020 at 1.1556 but started to edge higher amid renewed USD weakness on Thursday. As of writing, the US Dollar Index, which tracks the greenback’s performance against a basket of six major currencies, was down 0.1% at 94.15.

GBP/USD snapped a four-day winning streak on Wednesday and seems to have gone into a consolidation phase around 1.3600.

Gold’s downside remained limited with the benchmark 10-year US Treasury bond yield falling modestly on Wednesday. The precious metal continues to fluctuate in a relatively tight range above $1,760.

Cryptocurrencies: Bitcoin advanced to its highest level since May 12 at $55,757 on Wednesday and is up more than 15% since the beginning of the week. Ethereum also closed in the positive territory but seems to be struggling to break above the static resistance located around $3,600.

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