Dollar softens ahead of December jobs data, Draghi supports

Investing.com - The greenback traded largely lower against most major currencies on Thursday after investors sold the greenback for profits ahead of the release of the official December jobs report on Friday, though dovish comments from European Central Bank head Mario Draghi cushioned the greenback's losses.

U.S. trading on Thursday, EUR/USD was up 0.21% at 1.3604.

Profit takers sent the dollar inching lower on Thursday as investors fled to the sidelines to await the release of the December jobs report on Friday.

The dollar gained this week after payroll processor ADP reported that private-sector nonfarm payrolls rose by 238,000 in December, surpassing consensus forecasts for an increase of 200,000, while the Federal Reserve said in the minutes of its December policy report that authorities felt the decision to trim its monthly bond purchases in January was the right one and stressed the need to follow up in "measured" steps.

Earlier Thursday, the Labor Department said the number of individuals filing for unemployment assistance in the U.S. last week fell by 15,000 to 330,000 from the previous week’s revised total of 345,000.

Economists had expected jobless claims to decline by 10,000.

The euro, meanwhile, faced pressures of its own after ECB President Mario Draghi “strongly” reiterated the bank’s forward guidance on interest rates, saying monetary policy will remain accommodative for as long as necessary, which cushioned the dollar's losses.

Draghi said the ECB was ready to take "further decisive action" if monetary authorities detected unwarranted short-term tightening in the money markets or if the outlook for inflation worsened in the medium term. The ECB would consider "all possible instruments" to tackle these contingencies, he added.

Draghi's comments came after the ECB left interest rates on hold at 0.25%, in a widely anticipated decision.

Also in Europe, Germany's industrial production rose 1.9% in November, beating market calls for a 1.5% gain, which helped push the single currency higher against the dollar.

The greenback was down against the pound, with GBP/USD up 0.20% at 1.6482.

The Bank of England earlier left rates on hold at 0.5% and announced no change to the size of its GBP375 billion asset purchase program, as was widely expected.

The dollar was down against the yen, with USD/JPY down 0.06% at 104.79, and down against the Swiss franc, with USD/CHF down 0.43% at 0.9073.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.30% at 1.0854, AUD/USD down 0.08% at 0.8992 and NZD/USD trading down 0.16% at 0.8253.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.17% at 81.07.

On Friday, markets will move on the U.S. December jobs report.