Written by The Banking Post
The US dollar traded narrowly on Monday as investors awaited a string of labour market reports this week that could determine the size of the Federal Reserve’s widely expected rate cut later this month.
The currency inched 0.1% higher against the yen to 147.20 in early Asian trade, following a 2.5% slide against the Japanese currency in August. The euro rose 0.1% to $1.1693, while sterling edged up 0.05% to $1.3510. US markets were shut for a holiday.
Focus is firmly on Friday’s nonfarm payrolls report, preceded by data on job openings and private payrolls. “Any downside surprises in the labour market will likely lift expectations for a larger Fed cut—whether a standard 25 basis points or a more aggressive 50,” said one currency strategist.
According to CME’s FedWatch tool, investors are currently pricing in an 87% chance of a 25bps cut this month.
The dollar index slipped 0.04% to 97.79, extending a monthly loss of more than 2.0% as worries over Fed independence added to pressure. President Donald Trump’s ongoing legal fight to dismiss Fed Governor Lisa Cook remains unresolved, keeping investors cautious.
At the same time, uncertainty lingers over Trump’s tariffs, after a US appeals court ruled most of them illegal. Despite the ruling, US Trade Representative Jamieson Greer said talks with trading partners would continue.
In other currencies, the Australian dollar firmed 0.18% to $0.6548, while the New Zealand dollar gained 0.17% to $0.5904. The offshore yuan held near a 10-month high at 7.1216 per dollar, buoyed by stronger central bank fixings and a resilient stock market, even as factory activity contracted for a fifth straight month in August.
