The dollar margin is lower before wages; euro benefits By Investing.com

Investing.com – The U.S. dollar edged lower on Monday in thin trading affected by the holidays, as traders awaited key labor market data for signs of potential Federal Reserve interest rate cuts.

At 05:55 ET (09:55 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1 percent lower at 101.577, after earlier touching 101.79 , a level not seen since August 20.

Business is shut down on Monday as the US is on holiday, celebrating Labor Day.

Dollar focuses on wages report

The dollar bounced back last week, selling off about 5% since the start of July, and attention now turns to the US jobs report later this week.

The US, scheduled for Friday, will be crucial after Federal Reserve Chairman Jerome Powell shifted from a fight against inflation to a preparation to protect against job losses, suggesting the likelihood of a 25 basis point interest rate cut. basis during this month.

An outcome in line with forecasts for a gain of 164,000 in non-farm payrolls and a 4.2% would likely see the chance of a 50 basis point cut fall flat and require an extraordinarily strong report to cause markets to give up 25 basis points. .

There are other updates on the health of the labor market ahead of Friday’s report, starting with Wednesday’s report, which also contains data on layoffs. Private sector employment data will be released on Thursday, along with the weekly report on .

Euro bounces back despite weak data, political uncertainty

In Europe, it traded 0.2% higher at 1.1067, firm after earlier touching 1.1043, its lowest since Aug. 19.

remained in contraction territory in August, with S&P Global’s final eurozone manufacturing purchasing managers’ index coming in at 45.8 in August, well below the 50 mark that separates growth from contraction.

It cut interest rates in June to try to boost the region’s economy and looks set to do so again later this month after eurozone inflation fell to 2.2% in August, a three-year low .

On the political front in Europe, the Alternative for Germany (AfD) became the first far-right party to win a state legislative election in Germany since World War II, with the result in Thuringia.

The German government’s unwavering authority could also complicate European politics when the bloc’s other major power, France, is still struggling to form a government after snap elections in June and July.

gained 0.1% to 1.3138, with sterling remaining in demand, boosted by expectations that they will keep interest rates high longer than in the United States and the euro zone.

The BoE cut rates by 25 basis points on August 1 to 5%, and money markets are pricing in another 40 basis points of cuts by the end of the year.

Yen, yuan slide after PMI data

In Asia, it rose 0.4 percent to 146.69, the yen retreating slightly after factory activity in Japan contracted again in August, a private sector survey showed on Monday.

The final (PMI) rose to 49.8 in August from 49.1 in July and up from 49.5 reported in the flash reading. It remained below the 50.0 mark that separates growth from contraction for two straight months.

traded 0.3% higher at 7.1105, the yuan retreated after “official” Chinese data on Saturday provided the first insight into how the world’s second-largest economy fared in August, activity of production falling to a six-month low, contracting for the fourth straight time. month.