Bets on Sharp US rate cut drop held the dollar near three-week highs on Monday. Greenback kept its gains after last week’s strong U.S. jobs data.
U.S. non-farm payrolls rebounded in June, rising 224,000, the most in five months. The forecast-beating job gains virtually ended the chances for a half-point Fed rate cut at the end of July. Modest wage gains and other data shown the world’s largest economy was losing steam. This may mean that the central bank is still expected to cut rates by a quarter point.
The dollar’s rebound follows a period of weakness as mounting expectations for Fed rate cuts weighed.
The dollar index stood at 97.233, down marginally on the day but near the 3-week high of 97.443 hit on Friday.
Traders are now focused on Federal Reserve Chairman Jerome Powell’s Congressional testimony, due on Wednesday and Thursday, as well as U.S. inflation data out later this week.
Markets have priced in a 25 basis-point cut to U.S. interest rates when the Fed holds its next policy meeting on July 30-31. Traders expect several more later this year and next as the U.S. economy cools.
START TRADINGForex – Bets on Sharp US rate cut drop
The yen traded at 108.45 yen per dollar, up 0.1% on the day and above Friday’s 3-week low of 108.64 yen.
The euro, which dropped to $1.1208 on Friday, traded at $1.1227, unchanged on the day. The common currency has been under pressure from dollar strength and data showing weakness in the German industrial sector.
Sterling edged down to $1.2530. The pound hit a six-month low below $1.25 on Friday after poor economic data and on heightened expectations that the BoE will cut interest rates in 2020. Traders are looking for signs whether Britain’s dismal PMI releases are filtering through to weaker economic growth. If confirmed, this could reinforce investors’ expectations of interest rate cuts later this year and a weaker pound.
Oil prices steadied on Monday as tensions over Iran’s nuclear program were tempered by global economic growth concerns and consequently oil demand. On Sunday Trump issued another warning over Iran’s nuclear activities. “They’d better be careful,” he said. However, oil prices continue to be pressured by lingering fears over demand.
Brent crude futures were down 1 cent by 1122 GMT at $64.22 a barrel. U.S. West Texas Intermediate (WTI) was down 2 cent at $57.49.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money