FILE PHOTO: U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
NEW YORK — The dollar edged down against a basket of currencies on Tuesday after data showed U.S. services industry growth eased and as investors braced for a busy week that includes a European Central Bank rate decision, congressional testimony from Federal Reserve Chair Jerome Powell and U.S. jobs data.
Bitcoin hit a record high on Tuesday before retreating sharply in a volatile session. The world’s largest cryptocurrency is up nearly 50% this year, fueled by investors pouring money into U.S. spot exchange-traded crypto products and the prospect that global interest rates may fall.
Bitcoin was last down 7.04% to $62,745.23, after rising as high as $69,202.
READ: Mystery, scandals and speculation: bitcoin’s record
U.S. services industry growth slowed a bit in February amid a decline in employment, according to the Institute for Supply Management (ISM). Separately, data showed new orders for U.S.-manufactured goods dropped more than expected in January.
“The ISM numbers today showed growth in the service sector slowed in February, in no small part due to a decline in employment levels, and that has raised some concerns about the strength of the U.S. economy,” said Stuart Cole, chief economist at Equiti Capital.
The dollar index, which measures the buck against six major peers, was down 0.04% to 103.8.
Most major currency pairs traded in familiar ranges.
“The G10 FX world remains incredibly subdued,” said Michael Brown, market analyst at online broker Pepperstone in London.
“There’s some reluctance from most market participants to trade with conviction ahead of Powell tomorrow, ECB on Thursday, and of course NFP (nonfarm payrolls) on Friday, which is probably exacerbating the quiet conditions at the start of the week,” he said.
The dollar index, which measures the buck’s strength against a basket of six currencies, is up about 2.3% for the year, lifted by better-than-expected U.S. economic data, but the currency’s rally has stalled in recent sessions, as investors await clarity on Fed policy.
READ: Bitcoin bursts above $65,000, record high comes into view
Chair Powell is likely to reinforce the message that the Fed wants to wait for more data before any rate cuts when he testifies to Congress about inflation and the economy on Wednesday and Thursday.
“We should expect Fed Chair Powell to reiterate patience and emphasize (there is) no hurry to cut rates,” said Christopher Wong, currency strategist at OCBC in Singapore.
The ECB meets to discuss policy on Thursday but is widely expected to leave interest rates at a record 4%. Investors will be on the lookout for any hints about when rates might start to fall and will scrutinize updated economic projections.
Survey data on Tuesday showed that business activity in the euro zone showed signs of recovery last month. The euro was 0.04% lower against the dollar at $1.08515.
U.S. employment figures for February have the potential to rock markets on Friday. Economists expect hiring slowed last month, but a bigger-than-expected number could add to the dollar’s rise this year.
Meanwhile, news out of China’s National People’s Congress contained few surprises, with Beijing sticking with an economic growth target of 5% and a budget deficit of 3%. Analysts at Nomura said the growth target will be challenging to meet without more stimulus.
The offshore yuan was little changed at $7.2117. [CNY/]
The dollar slipped 0.4% against the yen to 149.925, retreating further from last week’s high of 150.85.
A break higher would open the way to November’s top at 151.92, but would also run the risk of provoking Japanese intervention.
Sterling rose 0.09% to $1.2702 ahead of the British budget on Wednesday. Finance Minister Jeremy Hunt has been trying to dampen speculation about big pre-election tax cuts.