Dollar pauses as rate hike fears subside, Fed minutes will rise next


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US dollars are counted by a banker at a bank in Westminster, Colorado on November 3, 2009. REUTERS / Rick Wilking / File Photo

  • Big US jobs beat f’cast but details are sweeter than expected
  • Dollar retreats in response to easing rate hike fears
  • Fed minutes; RBA on the horizon this week

SINGAPORE, July 5 (Reuters) – The dollar took a hiatus on Monday, after recent gains hit a slowdown when last week’s U.S. employment details allayed concerns over the timing of rate hikes American interests.

While the overall June job creation figure exceeded expectations, unemployment rose, labor market participation remained stagnant and the pace of hourly wage growth slowed – suggesting that increases in rates could be further away than the markets feared.

Against the risk-sensitive Australian and New Zealand dollars, the greenback slipped 0.7% and 0.9%, respectively in the wake of Friday’s data, then stabilized on Monday.

The dollar fell slightly against the yen, rising 0.14% to 111.15 yen at the start of the Asian session, after falling just below 111 yen on the jobs report. The euro was flat at $ 1.1859, against Friday’s three-month low of $ 1.1807.

“The report was mixed enough to probably prevent the Fed from announcing an upcoming cut,” Westpac analyst Imre Speizer said on the phone from Christchurch, referring to the US Federal Reserve setting the benchmark US key rate.

“I think the market thought you would get a signal at (the) Jackson Hole (meeting) in August. This report says it might be a bit early,” he said.

The British pound was stable at $ 1.3820.

The US dollar index was flat at 92.334, after falling about 0.3% to that level on Friday.

It’s up about 2% in three weeks since the Fed surged the greenback in June – and changed the positioning of bonds and currencies – with a surprisingly hawkish projection for rate hikes from 2023. .

The minutes of that June meeting are due out on Wednesday and may contain more details on the thinking of policymakers.

“(The minutes) will likely strengthen the FOMC’s hawkish turn,” Commonwealth Bank of Australia analyst Joe Capurso said, referring to the federal rate-setting committee.

“More information on when the FOMC might cut back on asset purchases may raise US interest rates and the dollar,” he said.

“So this may be further evidence that the FOMC’s inflation outlook is changing. In particular, analysts will be looking for signs that the FOMC is less confident that the inflation spike will be transient and / or that the FOMC’s tolerance for a breach of inflation is declining. “

Also on the horizon this week is a meeting of the Reserve Bank of Australia (RBA) on Tuesday, which has markets going because the central bank announced a decision on the fate of its bond buying program and its performance target.

The RBA is not expected to change its cash rate, but economists polled by Reuters expect it will not extend its three-year yield target beyond the April 2024 bond and adopt a flexible approach to bond purchases.

Cryptocurrencies were flat on Monday, with bitcoin at $ 34,903 and ether clinging to the recent momentum to trade at $ 2,318.

American markets are closed on Mondays for Independence Day.

Reporting by Tom Westbrook; Editing by Jacqueline Wong

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