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Dollar stalls as rate hike fears subside, Fed raises minutes by Reuters

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

By Tom Westbrook

SINGAPORE (Reuters) – The dollar took a breather on Monday after recent gains hit a slump as details from last week’s U.S. jobs report eased nervousness over the timing of price hikes. interest rates in the United States.

While June’s job creation figure beat forecasts, unemployment rose, labor force participation remained unchanged, and the pace of hourly earnings growth slowed, suggesting that rate hikes could be on the rise. further than the markets fear.

Against risk-sensitive Australian and New Zealand dollars, the dollar fell 0.7% and 0.9%, respectively, on Friday’s data, then leveled off on Monday. [AUD/]

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 following the employment report. The euro was stable at $ 1.1859, down from Friday’s three-month low of $ 1.1807.

“The report was mixed enough to prevent the Fed from announcing a gradual reduction soon,” Westpac analyst Imre Speizer said by phone from Christchurch, referring to the US Federal Reserve, which sets the policy benchmark rate for USA.

“I think the market was thinking that you would get a signal at (the) Jackson Hole meeting in August. This report says that could be a little early,” he said.

The British pound was stable at $ 1.3820. [GBP/]

It was flat at 92.334, after falling about 0.3% to that level on Friday.

It is up about 2% in three weeks since the Fed fueled a jump in the dollar in June, and a positioning jolt in bonds and currencies, with a surprisingly aggressive projection for rate hikes beginning in 2023.

Minutes from that June meeting will be released on Wednesday and could have more details on the thinking of policymakers.

“(The minutes) are likely to reinforce the radical turnaround of the FOMC,” Commonwealth Bank of Australia (OTC 🙂 analyst Joe Capurso said, referring to the Federal Open Market Committee that sets rates.

“More information on when the FOMC could reduce its asset purchases can boost US interest rates and the dollar,” he said.

“So it may be further evidence that the FOMC’s inflation outlook is changing. In particular, analysts will look for signs that the FOMC is less confident that the rise in inflation will be transitory and / or that the FOMC’s tolerance for an excessive increase in inflation is decreasing. “

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

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

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

US markets are closed on Mondays for the Independence Day holiday.

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