By Sam Forgione
NEW YORK (Reuters) – The U.S. dollar recovered against the euro on Thursday after German Bund yields retreated from their highs for the year and optimism grew that the April U.S. employment report would show strength after upbeat data on weekly jobless claims.
German 10-year Bund yields dipped from a 5-1/2-month high of 0.796 percent to last trade at 0.598 percent <DE10YT=RR>. The move lower made those yields less attractive compared with 10-year U.S. Treasury yields, which were last at 2.17 percent, and helped the dollar regain some demand.
“The German 10-year closed the day essentially unchanged after a big round-trip, perhaps weighing on the euro,” Brian Daingerfield, currency strategist at Royal Bank of Scotland in Stamford, Connecticut.
The euro was on track to post its biggest one-day decline against the dollar in nearly a month, marking a turnaround after hitting a 10-1/2 week high of $1.13920 earlier in the session.
The dollar’s recovery against the euro was also helped by U.S. Labor Department data on Thursday showing jobless claims stayed near a 15-year low last week, which boosted optimism that Friday’s U.S. nonfarm payrolls report for April could show strength.
The reading is closely watched since strength in the labor market could lead the Federal Reserve to hike rates sooner.
Economists expect U.S. employers to have added 224,000 jobs last month, according to a Reuters poll. That would mark an increase of about 100,000 from the previous month.
Analysts said traders were balancing out recent dollar weakness by buying back dollars and selling euros ahead of the data.
“Nobody wants to be short dollars going into it,” said Win Thin, currency strategist at Brown Brothers Harriman in New York.
Sterling edged higher against the dollar and was on track to post its biggest one-day rise against the euro in over two weeks as Britons voted on Thursday in the most unpredictable election in decades. The recovery in sterling against the euro came after sterling hit a three-month low of 74.82 pence per euro earlier in the session.
The euro was last down 0.7 percent against the dollar at $1.12690 <EUR=EBS>. The dollar was last up 0.59 percent against the Swiss franc at 0.92160 franc <CHF=EBS>. The dollar was last up 0.28 percent against the yen at 119.800 yen <JPY=EBS>.
The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.57 percent at 94.618 <.DXY>.
(Reporting by Sam Forgione; additional reporting by Jemima Kelly in London; Editing by Peter Galloway)