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Dollar soft as China reopening hopes boost risk sentiment
Global Banking and Finance Review
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SINGAPORE (Reuters) – The dollar struggled to gain a foothold on Monday and was languishing at five-month lows as traders looked past stronger than anticipated U.S. jobs data, while growing hopes of China reopening boosted risk sentiment.
SINGAPORE (Reuters) – The dollar struggled to gain a foothold on Monday and was languishing at five-month lows as traders looked past stronger than anticipated U.S. jobs data, while growing hopes of China reopening boosted risk sentiment.
The dollar index, which measures the currency against six major peers including the yen and euro, was down 0.18% at 104.28, its lowest since June 28. The index fell 1.4% last week.
The dollar initially jumped on Friday after U.S. data showed that employers added 263,000 jobs in November, well above estimates of 200,000, but gave up the gains as traders booked profits, with some of the Fed speakers allaying market concerns.
“We move past U.S. payrolls with only a momentary shake for risky markets,” said Chris Weston, head of research at Pepperstone, noting that the data supported the ‘soft landing’ argument and is unlikely to change the Fed’s course, where a 50 basis point hike next week is still the firm default position.
“With limited data to drive this week and no Fed speakers, the market may start to think for itself and look at massaging exposures ahead of next week,” Weston added.
Investor focus will firmly be on the U.S. consumer price inflation data due on Dec. 13, one day before the Fed concludes its two-day meeting.
The U.S. central bank is expected to increase rates by an additional 50 basis points at the meeting. Fed funds futures traders are now pricing for the Fed’s benchmark rate to peak at 4.92% in May.
Also, weighing on the dollar was growing hopes of China slowly reopening, with more Chinese cities announcing an easing of coronavirus curbs on Sunday.
The Australian dollar rose 0.54% to $0.683, while the kiwi was 0.12% higher at $0.642.
The euro was up 0.09% to $1.0547, having gained 1.3% last week. Sterling was last trading at $1.2298, up 0.09% on the day.
The Japanese yen weakened 0.11% versus the greenback at 134.46 per dollar, having gained 3.5% on the greenback last week.
(Reporting by Ankur Banerjee in Singapore; Editing by Stephen Coates)
The dollar index measures the value of the U.S. dollar against a basket of six major currencies, including the euro and yen. It is used to gauge the dollar's strength in the foreign exchange market.
Monetary policy refers to the actions taken by a central bank to control the money supply and interest rates in an economy. It aims to achieve macroeconomic objectives such as controlling inflation and stabilizing currency.
A basis point is a unit of measure used in finance to describe the percentage change in the value of financial instruments. One basis point is equal to 0.01%.
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