US dollar index steadies as focus shifts to jobs data

London

THE US dollar was broadly steady on Monday as global markets started the week in a cautious mood, while currency market focus started shifting towards key US payrolls data on Friday.

Some analysts attributed the lack of momentum during Asian trading to a spike in Covid-19 cases in the region, as Australia's most populous city, Sydney, went into lockdown.

Indonesia is battling record-high cases while a lockdown in Malaysia is set to be extended. Thailand too announced new restrictions in Bangkok and other provinces.

But the Australian dollar, which is seen as a liquid proxy for risk appetite, was up around 0.1 per cent on the day at US$0.75935 at 07.37am GMT.

The US dollar index was little changed at around 91.718. Last week, it dropped 0.5 per cent.

The New Zealand dollar was up 0.2 per cent at US$0.708.

Softer-than-expected inflation data last week did little to ease concerns about the Federal Reserve dialling down its monetary stimulus.

The US personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, increased 0.5 per cent, short of expectations for a 0.6 per cent rise.

Speculators decreased their net short dollar positions in the latest week, showed calculations by Reuters and US Commodity Futures Trading Commission data released on Friday.

Among a raft of economic indicators this week, Friday's payroll data is a key focus, with economists expecting an increase of 675,000 jobs.

Noting a lack of volatility in currency markets, ING strategists wrote in a note to clients that "it will probably take a jobs number closer to the one million mark to shake up the US rates curve and forex markets once again." News of a bipartisan US infrastructure agreement helped risk appetite. The plan is valued at US$1.2 trillion over eight years, of which US$579 billion is new spending.

The euro was up around 0.1 per cent against the US dollar at US$1.1941 , while euro-dollar implied volatility gauges with a one-year maturity were close to their lowest since March 2020. The euro strengthened slightly versus the Norwegian krone, with the pair at 10.1376.

Oil prices slipped slightly after earlier climbing to their highest since October 2018 on expectations demand growth will outstrip supply and the Organization of the Petroleum Exporting Countries and its allies (Opec+) will be cautious in returning more crude to the market from August. Opec+ meets on Thursday. REUTERS