US dollar steadies as strong labor data offsets Wall Street selloff

The US dollar stabilized on Thursday, November 5, recovering from earlier losses as unexpectedly strong labor market figures reinforced expectations that the Federal Reserve could raise interest rates again in December.

The greenback found support despite a sharp decline in US technology stocks, while investors remained cautious ahead of Friday's employment report.

Price overview

The dollar index hovered near 101.51 points during Thursday's trading, showing little change after Wednesday's decline.

The euro traded around $1.122, while sterling remained near $1.347 following the Bank of England's decision to raise interest rates.

The dollar also traded around 158 yen, with the Japanese currency benefiting from expectations of further monetary tightening by the Bank of Japan.

Labor market strength supports dollar

Initial US unemployment claims fell to 189,000 last week, matching their lowest level in 57 years, while third-quarter labor productivity exceeded expectations.

The figures strengthened the case for keeping monetary policy restrictive, particularly as inflation remains above the Federal Reserve's target.

Wall Street losses complicate outlook

US equities fell sharply as renewed concerns about artificial intelligence investment triggered another selloff in semiconductor stocks.

The retreat increased demand for defensive assets, although declining Treasury yields limited the dollar's gains.

Fed rate expectations in focus

Interest rate markets assigned a roughly 74.5% probability to a December rate increase, compared with 79.9% a week earlier.

Federal Reserve officials continued to emphasize persistent inflation risks, leaving investors divided over the pace of further tightening.

Market outlook

The dollar index faces resistance around 101.70, followed by 102.00, while support stands near 101.20.

Friday's nonfarm payrolls report will be the next major test, with stronger employment growth potentially supporting the dollar and weaker figures likely to weigh on rate expectations.