The U.S. dollar stabilized on Monday, after suffering losses several days ago due to lower-than-expected U.S. jobs data. Currency markets also experienced problems, they lacked momentum as investors looked ahead to key inflation data later this week.
The latest jobs report was regarded as a relief for markets. The report showed that a pick-up in job growth was not strong enough to raise expectations for the U.S. Federal Reserve to change its monetary policy in the near future, and this hurt the dollar.
During the early European session on Monday, there was little movement in main currency pairs. At 11:25 GMT, the dollar index stood at 90.141. The euro dropped 0.1% against the greenback, at $1.2159.
The Australian dollar strengthened its position against the U.S. dollar, as it gained 0.2% and reached 0.77535.
On Monday, China’s yuan hovered around the key 6.40 level, with offshore yuan changing hands at 6.3960. The country’s export growth missed forecasts and imports grew at their fastest pace in 10 years in May thanks to a demand for raw materials.
Dollar, inflation data, and ECB meeting
Investors, as well as analysts, are waiting for the U.S. inflation data and European Central Bank (ECB) meeting. Dovish rhetoric from ECB policymakers suggests the central bank is in no hurry to slow the pace of buying under the 1.85 trillion euro ($2.24 trillion) Pandemic Emergency Purchase Programme (PEPP). But policymakers from the Federal Reserve have begun moving toward a discussion about winding that help back.
Speculators reduced their net dollar positions in the latest week, according to the data released by the U.S. Commodity Futures Trading Commission.
Elsewhere, the U.S. and other rich countries reached a deal on Saturday to squeeze more money out of international corporations. The countries decided to reduce their incentive to shift profits to low-tax offshore havens.
Investors were wary of how tech stocks would react, regarding the currency markets. The plans for a minimum global corporate tax rate of at least 15% could result in repatriation of global capital over a longer period of time which would be positive for the greenback. The removal of tax havens could have implications for the billions of dollars parked abroad by U.S.-based corporations.
In cryptocurrencies, bitcoin gained 2% and reached $36,535, while ether was up 4.2% at $2,825. Both cryptocurrencies were trading within the month’s relatively narrow ranges.