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The dollar edged down against other major currencies on Wednesday, as stronger-than-expected U.S. jobs data and a U.K. budget release set off choppy trading in a market awaiting clues about the future policy paths of their respective central banks.

U.S. private payrolls growth surged in October, overcoming fears of temporary disruptions from hurricanes and strikes, according to the ADP National Employment Report.

Meanwhile, separate data showed the U.S. economy grew at an annualised rate of 2.8% in the third quarter, slightly lower than the 3% expected by economists.

The U.S. dollar index, which measures the currency against six major rivals, rose to 104.43 earlier in the session before losing ground 0.2% to 104.09. It rose to the highest since July 30 at 104.63 on Tuesday.

“I think the momentum in the U.S. economy looks pretty good still,” said Brad Bechtel, global head of FX at Jefferies in New York.

“Obviously, we’ll get a lot more data the end of this week with the nonfarm payroll figures. But expectations on the (Federal Reserve) have been dialed back quite a bit from pretty extreme levels. I think Friday’s report will inform how we view the Fed going forward.”

Mixed U.S. indicators overnight, showing a loosening U.S. jobs market but a confident consumer, provided little clarity on the outlook for Federal Reserve rates, allowing the greenback to drift lower with Treasury yields.

Recently though, economic readings have pointed to a resilient jobs market and economy, spurring traders to pare back their bets on rate cuts.

Matt Weller, head of market research at StoneX, in Grand Rapids, Michigan, said: “A 25bps post-election rate cut from the Fed appears to be a done deal at this point”. But he cautioned that a strong NFP report could set the stage for a pause as soon as December.

Both the dollar and U.S. bond yields have also been buoyed in recent days by rising speculation in markets and on some betting platforms of a victory in the Nov. 5 presidential election for Republican candidate Donald Trump - whose tariff and immigration policies are seen as inflationary - and who is standing against Democrat Kamala Harris.

That helped leading cryptocurrency bitcoin surge to near its all-time high from March at $73,803.25, as Trump has vowed to make the United States “the crypto capital of the planet”.

The token last changed hands at about $72,033, after pushing as high as $73,609.88 in the previous session.

U.K. budget

Sterling, which fell as much as 0.6% as British finance minister Rachel Reeves delivered the Labour government’s first budget, was last down about 0.4% at $1.2969.

Gilt yields initially fell during Reeves’ budget but then rose later in the session, with the 10-year UK government bond yield rising 6 basis points to hit 4.39%, its highest since late May.

Reeves, along with Prime Minister Keir Starmer, has reiterated the need for tough fiscal measures to help improve Britain’s public finances.

They are seeking to retain the confidence of investors, two years after then-prime minister Liz Truss’ tax-cutting plans sparked a crisis in the bond market.

“Despite the large increase in taxes there were no big negative surprises in the budget while Reeves’ forceful pledge to move towards a balanced budget was supportive,” said Jane Foley, head of FX strategy at Rabobank in London.

“It remains to be seen if UK growth does rise through increased investment but this budget was heavy on optimism which could douse the sceptics for now.”

The euro was last up 0.37% at $1.0858, while the dollar was flat at 153.40 yen.

German growth and regional inflation data came in stronger than expected causing traders to trim their bets on an outsized rate cut from the European Central Bank in December.

The euro zone economy also grew 0.4% in the third quarter, more than the 0.2% expected by economists.

The Aussie dollar, which dropped as low as $0.6537 for the first time since Aug. 8, after data showed inflation slowed to a 3-1/2-year low, was up 0.2% at $0.6575.  

– Source: CNBC –