Currencies: Dollar gathering strength with sharper focus turning to jobs data

The U.S. dollar advanced against major rivals Thursday as the release of monthly U.S. labor-market data drew closer. The British pound, meanwhile, continued to struggle as a deadline in Brexit talks was fast approaching.

What are currencies doing?

The ICE Dollar Index DXY, +0.21%  was up 0.2% to 93.75, on course for a fourth straight rise. The broader WSJ U.S. Dollar Index BUXX, +0.24%  was up 0.3% at 87.15.

Against the Japanese yen USDJPY, +0.42% the dollar rose to ¥112.71 from ¥112.29 late Wednesday in New York.

The British pound GBPUSD, -0.0896% fell to $1.3342 from $1.3394, and the euro EURUSD, -0.1017%  declined to $1.1783 from $1.1798 in the previous session.

The buck gained versus the Canadian dollar USDCAD, +0.3910% buying C$1.2832, rising from C$1.2788. The dollar started to rally Wednesday after the Bank of Canada sounded a cautious tone about interest rates.

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What’s driving the markets?

The November snapshot on U.S. nonfarm payrolls and wages will arrive on Friday, with economists polled by MarketWatch looking for the addition of 200,000 jobs and growth of 0.3% in average hourly wages. Private labor market data from ADP on Wednesday showed employment growth was solid in November, with the addition of 190,000 jobs.

The Labor Department’s report will keep investors focused on Washington, where President Donald Trump is scheduled on Thursday to meet congressional leaders to discuss a bill to keep the government open. A bill to avoid a shutdown will be up for a vote in the House on Thursday, after the House Rules Committee on Wednesday put together a temporary funding package.

Lawmakers in the Senate and the House were still working out how to produce a single tax-cut bill that could be passed and sent to Trump to sign in to law.

Meanwhile in Britain, Brexit negotiations are in focus. Of particular interest is the chances for a deal on the Irish border issue, the last of three Brexit issues that have to be resolved before Friday, a deadline set by lead EU negotiator Michel Barnier.

U.K. Prime Minister Theresa May is working on a new proposal for the Irish border that she will present on Thursday, Ireland’s Prime Minister Leo Varadkar said, according to media reports. A dispute with May’s Northern Ireland political allies over the issue of whether to have a “hard” or “soft” border scuttled a potential deal on Monday.

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What are strategists saying?

“The dollar is starting to regain some strength as traders begin to prepare for nonfarm payrolls data tomorrow. The dollar index has now broken a four week downtrend and is now starting to build a run of higher lows and higher highs, which is are early stages of a new uptrend,” said Richard Perry, market analyst at Hantec Markets, in a note.

A “decent read through from the ADP employment change yesterday sets up for a nonfarm payrolls…where with a rate hike nailed on for December, a dollar positive/risk positive reaction would meet a positive surprise in the data,” he said.

What are the data?

A reading on weekly jobless claims is due at 8:30 a.m. Eastern Time, while the flow of funds report for the third quarter comes out at 12 p.m. Consumer credit for October is on the docket at 3 p.m.

William Dudley, president of the Federal Reserve Bank of New York, is scheduled to give introductory remarks at the “Higher Education Financing and Costs and Returns of Higher Education” event, held at the New York Fed, at 8:30 a.m. Eastern.

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