Forex - Dollar holds steady after US jobs report, inflation data eyed
The U.S. dollar was holding steady against a currency basket on Monday, after rebounding from 15-month lows on Friday on the back of a solid U.S. jobs report as investors awaited key inflation data later this week.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 93.32 by 03.30 a.m. ET (07.30 a.m. GMT) after rising 0.72% on Friday.
The rebound came after the index fell to 92.41 on Wednesday, its lowest since May 2016.
The Labor Department reported Friday that the U.S. economy added 209,000 jobs last month, handily beating expectations for a gain of 183,000.
An uptick in wage growth indicated that inflationary pressures are firming. Markets believe stronger inflation will enable the Federal Reserve to stick to its plans for a third interest rate hike this year.
The greenback had been pressured lower by a combination of worries over political turmoil in Washington and recent lackluster economic reports, which raised doubts over whether the Fed would be able to stick to its planned tightening path.
Investors were looking ahead to U.S. inflation reports later in the week for indications of whether the recovery in the dollar is sustainable in the longer term.
A report on U.S. producer prices for July is due out on Thursday and the consumer price inflation report will be released on Friday.
The dollar was little changed against the yen, with USD/JPY at 110.74, holding below Friday’s high of 111.04.
The euro, which touched a two-and-a-a-half year high of 1.1909 on Wednesday, was a touch higher, with EUR/USD rising 0.14% to 1.1786 after falling 0.83% on Friday.
Sterling inched higher, with GBP/USD last at 1.3055, off Friday’s lows of 1.3023.
Friday’s strong gains in the dollar added to pressure on sterling, which was already on the defensive after the Bank of England left rates on hold on Thursday and cut its growth forecast for this year and next.