Investing.com - The dollar steadied on Thursday after hitting four-and-a-half year highs against a basket of other major currencies in the previous session, as investors positioned ahead of key economic events, including the European Central Bank meeting later in the day and Friday’s U.S. nonfarm payrolls report.
The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, slid 0.14% to 87.41, holding below Wednesday’s highs of 87.72.
The dollar was almost unchanged against the yen, with USD/JPY at 114.62, holding below the seven year highs of 115.52 struck overnight.
The greenback strengthened broadly on Wednesday following gains by Republicans in the U.S. mid-term elections and a strong private sector jobs report.
The ADP nonfarm payrolls report showed that the U.S. private sector added 230,000 jobs in October, ahead of expectations for jobs growth of 220,000.
Separately, the Institute of Supply Management said that its non-manufacturing index slowed to 57.1 last month from 58.6 in September.
However, the employment component of the index rose, boosting the outlook for the labor market ahead of Friday’s U.S. nonfarm payrolls report.
EUR/USD was up 0.19% to 1.2507, not far from Monday’s two year lows of 1.2437.
Investors were awaiting the outcome of the ECB meeting later Thursday after the Bank of Japan’s surprise stimulus move on Friday fuelled expectations that it will soon follow suit.
Most analysts were expecting the ECB to keep interest rates on hold at record lows and to refrain from implementing any new easing measures.
However markets were seeking assurances that the central bank remains prepared to implement additional stimulus measures if necessary, in order to spur growth and inflation in the euro area.
The bank’s latest policy announcement was given extra significance following recent reports of tensions within the ECB over President Mario Draghi’s leadership.
Earlier Thursday, data showed that German factory orders rose just 0.8% in September, well below forecasts of a 2.3% increase.
The weak data fuelled concerns over the outlook for the euro area’s largest economy.
The pound slipped lower, with GBP/USD down 0.18% to 1.5945. Sterling shrugged off data showing that U.K. industrial output topped forecasts in September.
Elsewhere, USD/CHF slid 0.13% to 0.9262.
USD/CAD edged up 0.10% to 1.1398, not far from Wednesday’s more than five year highs of 1.1465.
The Australian and New Zealand dollars firmed up after steep declines overnight as the rout in global commodity prices weighed.
AUD/USD eased up 0.12% to 0.8605, coming off the more than four -year trough of 0.8554 struck overnight. NZD/USD was flat at 0.7728, holding above 17-month lows of 0.7668.