By Ankur Banerjee
SINGAPORE (Reuters) – The dollar traded cautiously on Monday as investors weighed US jobs data, which showed some signs of slowing, raising expectations that the Federal Reserve is likely to be at the end of its monetary tightening cycle.

Against a basket of currencies, the dollar fell 0.048% to 104.18 but remained close to the two-month high of 104.44 hit on Aug. 25. The index gained 1.7% in August, ending a two-month losing streak.

With US markets closed on Monday, liquidity is likely to be low and traders reluctant to place large bets.

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Data on Friday showed that US job growth accelerated in August but the unemployment rate rose to 3.8% while wage growth slowed. The economy added 110,000 fewer jobs in June and July than previously reported.

“The Goldilocks metaphor is widely used and abused in business and finance circles, but given the various ‘soft landing’ signals emerging from the report, it seems entirely appropriate this time around,” said Ray Attrill, leader the foreign exchange strategy department at National Australia Bank.

A raft of economic data pointing to moderating inflation and an easing in the labor market has reinforced the impression that the US economy is slowing without slowing sharply, raising hopes that the economy is preparing for a soft landing is.

But Citi strategists warn of a harder landing, saying in a note that “stubborn wage and price inflation will lead to longer-term higher policy rates and ultimately a more pronounced slowdown in economic activity.”

Paul Mackel, global head of FX research at HSBC, said the only question from clients is whether downside surprises could materialize on US activity data and push the dollar lower.

“It’s certainly a risk, but economic data surprises in the euro zone are still on the downside and not improving much for China. Unless those improve significantly, the dollar will have a harder time falling.”

Mackel also said a rapid decline in US data would amplify the slowdown in the global economy that usually accompanies a stronger dollar.

Investors’ focus will be on a number of Fed officials who are set to speak this week for clues as to what the Federal Reserve will do at its next monetary policy meeting on September 19-20.

Markets are pricing in a 93% chance that the Fed will hold rates this month and a more than 60% chance of no further rate hikes this year, CME’s FedWatch tool showed.

The yen gained 0.06% to 146.16 per dollar. The Asian currency has been hovering around the psychologically significant 145 level since mid-August, with traders watching for signs of intervention.

Japan intervened in the currency markets last September when the dollar surged above 145 yen, prompting the Treasury to buy the yen and push the pair back down to around 140 yen.

The euro was up 0.06% at $1.078, while the sterling was at $1.2602, up 0.11% on the day.

The Australian dollar gained 0.2% to $0.6463 ahead of Tuesday’s Reserve Bank of Australia monetary policy meeting, which is expected to remain firm. A Reuters poll found that all but two of the 36 economists said the RBA would keep its official policy rate at 4.10% on Sept. 5.

The Australian dollar and New Zealand dollar were buoyed on Monday by measures taken by the Chinese authorities to support China’s property sector. [AUD/]

The Canadian dollar rose 0.07% to 1.36 per dollar ahead of the Bank of Canada’s monetary policy meeting this week, with the central bank expected to hold interest rates.

Among cryptocurrencies, Bitcoin is up 0.95% to $25,997.50. Ethereum gained 0.67% to $1,638.30.

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Currency bid prices at 0448 GMT

Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid

previous change


Euro/Dollar $1.0782 $1.0773 +0.09% +0.63% +1.0787 +1.0772

Dollar/Yen 146.1500 146.1500 -0.01% +11.36% +146.2350 +146.0650

Euro/Yen 157.59 157.56 +0.02% +12.32% +157.6600 +157.3400

Dollar/Swiss 0.8850 0.8859 -0.11% -4.30% +0.8857 +0.8843

Sterling/Dollar 1.2603 1.2590 +0.08% +4.19% +1.2605 +1.2587

Dollar/Canadian 1.3585 1.3581 +0.02% +0.26% +1.3598 +1.3583

Aussie/Dollar 0.6464 0.6450 +0.22% -5.17% +0.6475 +0.6445

NA 0.5946 0.5942 +0.05% -6.37% +0.5960 +0.5939


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(Reporting by Ankur Banerjee in Singapore; Editing by Shri Navaratnam and Kim Coghill)

Disclaimer: This report is automatically generated by the Reuters news service. ThePrint assumes no responsibility for the content.

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