Dollar Mired near Two-and-half Year Low

The dollar was on the back foot in forex trade on Monday. Soft U.S. jobs data further strengthened hopes for a fresh economic package. 

The Sterling eyed last-ditch Brexit talks between the United Kingdom and European Union.

The dollar index stood little changed at 90.726. On Friday, it hit a 2 1/2-year low of 90.471. 

The euro changed hands at $1.2133 after climbing on Friday to as high as $1.2177. It was a level last seen in April 2018.

On Friday, U.S. jobs data showed non-farm payrolls rose to 245,000 last month. It has been the smallest gain since May. It’s a sign the jobs recovery is losing momentum on the third wave of coronavirus infections.

The data may be putting pressure on Washington to pass a new round of stimulus to help the economy. It’s keeping the overall risk appetite intact and capping the U.S. dollar against riskier currencies.

Discussions aimed at delivering a fresh infusion of COVID-19 relief gathered momentum in the U.S. Congress on Friday. A bipartisan group of lawmakers worked to put the finishing touches on a $908 billion bill.  They hope to get it through this week.

The spectre of fresh borrowing improved the 10-year U.S. Treasuries yield to an 8 1/2-month high of 0.986%. It helped lift the dollar against the yen to 104.20 yen.

At its meeting next week, the U.S. Federal Reserve is unlikely to rush to ramp up stimulus. 

It would take until springtime to see the effects of a vaccine roll-out and gauge the economic trajectory. This was according to Chicago Federal Reserve Bank President Charles Evans on Friday.

On Thursday, the European Central Bank sets policy.

The Yuan

The offshore yuan stood at 6.5184 per dollar. It was just shy of its 2 1/2-year high of 6.5070 set on Friday.

Policymakers in China are comfortable with the yuan’s rise as the country’s economic rebound accelerates. Moreover,  the central bank gives the market greater leeway in setting the currency’s value, sources said.

The yuan is also known as the renminbi. It moved little after data showing China’s exports rose at the fastest pace in almost three years in November.

Sterling traded little changed at $1.3422. It stepped back from a 2 1/2-year high of $1.3540 touched on Friday. 

Investors are looking forward to talks between Britain and the EU this week. That is to avert a chaotic parting of ways at the end of 2020.

Earlier, it fell to as low as $1.3360. This came after weekend talks stalled on three thorny issues.