The dollar took a breather on Monday, after recent gains ran into a speed bump when details of last week’s U.S. jobs report soothed jitters about the timing of U.S. interest rate hikes.
While the headline June job creation figure beat forecasts, unemployment ticked higher, workforce participation didn’t budge and the pace of hourly earnings growth slowed - suggesting rate rises could be further away than markets have come to fear.
Against the risk-sensitive Australian and New Zealand dollars the greenback slipped 0.7% and 0.9%, respectively in the wake of the data on Friday, and then steadied on Monday. [AUD/]
The dollar clawed back slightly against the yen, rising 0.14% to 111.15 yen early in the Asia session, after dropping just below 111 yen following the jobs report. The euro was steady at $1.1859, off Friday’s three-month low of $1.1807.
“The report was mixed enough to probably keep the Fed from announcing tapering soon,” said Westpac analyst Imre Speizer on the phone from Christchurch, referring to the U.S. Federal Reserve which sets the benchmark U.S. policy rate.
“I think the market was thinking you’d get a signal at (the)Jackson Hole (meeting) in August. This report says that that just might be a bit early,” he said.
Sterling was steady at $1.3820. [GBP/]
The U.S. dollar index was flat at 92.334, having fallen about 0.3% to that level on Friday.
It is up about 2% in three weeks since the Fed drove a jump in the greenback in June - and positioning shakeout across bonds and currencies - with a surprisingly hawkish projection for rate hikes beginning in 2023.
Minutes from that June meeting are due to be published on Wednesday and might have more details on policymakers’ thinking.
“(The minutes) will likely reinforce the FOMC’s hawkish shift,” said Commonwealth Bank of Australia analyst Joe Capurso, referring to the rate-setting Federal Open Market Committee.