Today: November 10, 2024

To Contribute →

Login Register

US Dollar on backfoot at week open

August 7, 2023 at 6:15 pm | Economic Affairs

Aug, 07 (Agencies) — US Dollar on Monday was on the back foot following a mixed US jobs report provided little directional conviction and as market focus turned to inflation data from the world’s two largest economies due this week.
US economy added fewer jobs than expected in July, data on Friday showed, but it recorded solid wage gains and a decline in the unemployment rate.
As dollar fell to a one-week low against a basket of currencies in the aftermath of the data, its losses were capped as the report pointed to a still-tight labour market, suggesting the Federal Reserve may need to keep rates higher for longer.
US dollar index last stood at 101.98, languishing near Friday’s low of 101.73. Sterling rose 0.04% to $1.2756, while the euro dipped 0.01% to $1.1010. “There was a narrative in there for everyone, depending on your bias,” said Pepperstone’s Head of Research Chris Weston of the jobs report. “We are seeing a cooling of the labour market, but it’s not collapsing. It’s doing what we hoped it would do.”
US inflation data is due on Thursday, where expectations are for core inflation to have risen 4.7% on an annual basis in July.
“It’s hard to see the pullback being big across the dollar pairs, because fundamentally the US has still got the best growth, you got a central bank which is still very much data dependant, and I think there are risks this week that the CPI number comes out above expectations,” said Weston.
Also due this week is China’s July inflation print on Wednesday, with traders on the lookout for further signs of deflation in the world’s second-largest economy. “(We) see the country’s headline CPI to register a deflation this July after growth in consumer prices stalled in June,” said MUFG analysts in a note.
“While the narrative of soft recovery in China likely remains intact in the short-term, continued support from the Chinese government should boost the yuan.”
The offshore yuan was last marginally lower at 7.1901 per dollar. On Friday, a Chinese official said during a press conference by the state planner that liquidity in the country’s banking system would be kept reasonably ample, though investors were left wanting for more amid Beijing’s slow roll out of support to revive its economy.

Leave a Reply

Subscribe for monthly magazine

Contribute To Economic Affairs