Dollar Steady After Earnings; Euro slips on weak Investing.com data

Investing.com – The US dollar steadied on Monday, holding on to gains seen after Friday’s strong jobs report at the start of a week that included the release of key inflation data as well as minutes from the Federal Reserve’s latest meeting.

At 04:00 ET (08:00 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, traded marginally lower at 102.247. It rose 0.5 percent on Friday to a seven-week high, posting gains of more than 2 percent for the week, the biggest in two years.

Payroll boosts the dollar

The US growth eased fears of a US economic slowdown and boosted the idea that the Fed will not need to cut interest rates sharply to support the economy, boosting the dollar.

Traders were mostly seen shedding bets on another 50 basis point cut at the Fed’s next meeting and rated a more than 90% chance of a 25bps cut, CME Fedwatch showed.

This week’s focus is on addresses from a large number of Fed officials, more inflation data, as well as the minutes of the Fed’s September meeting. The Fed cut rates by 50 bps during the meeting and signaled the start of an easing cycle, though it still said future rate cuts would be data-dependent.

“Friday’s explosive US jobs report caused the kind of nasty repricing of rate expectations that we thought would materialize in a few weeks,” analysts at ING said in a note.

“Markets no longer have an excuse to look past Federal Reserve Chairman Jerome Powell’s pushback against 50 basis point cuts and are now finally aligned with Dot Plot projections of 25 basis point cuts in November and December.”

The greenback also got a boost from unrest in the Middle East, with Israel bombing Hezbollah targets in Lebanon and the Gaza Strip on Sunday, ahead of Monday’s one-year anniversary of the Oct. 7 attacks that sparked its war.

Weak German data hits euro

In Europe, it fell 0.1% to 1.0965 as the euro weakened after falling 5.8% in August, another illustration of the economic difficulties facing the zone’s largest economy euro.

for August are due later in the session and should show how consumers are doing in these difficult times.

The ECB’s chief economist, Philip Lane, as well as board members Piero Cipollone and Jose Luis Escriva are scheduled to speak later in the month and are likely to follow President Christine Lagarde in signaling a brisk pace of further easing.

fell slightly to 1.3113 after suffering a 1.9% drop last week, the steepest decline since early 2023.

The Bank of England’s chief economist, Huw Pill, said on Friday the central bank should move only gradually with interest rate cuts, a day after Governor Andrew Bailey was quoted as saying the BoE could move further aggressively to reduce borrowing costs.

Doubts over BoJ rate hike

fell 0.3 percent to 148.22, paring earlier gains after the pair rose to its highest level since mid-August.

The yen was hit by growing doubts about the Bank of Japan’s ability to continue raising interest rates in the coming months, especially amid uncertainty surrounding Japan’s upcoming general election.

it was largely unchanged at 7.0176, with Chinese markets still closed as the country celebrates Golden Week.