US dollar stabilises as markets wait for inflation data

London

THE US dollar stabilised on Monday after dropping on Friday following lower-than-expected US jobs data. Currency markets broadly lacked momentum as investors looked ahead to key inflation data later this week.

Friday's jobs data was seen as a relief for markets, showing a pick-up in job growth was not strong enough to raise expectations for the US Federal Reserve to tighten its monetary policy any sooner, and this hurt the US dollar.

There was little movement in major currency pairs during the early European session on Monday. World shares were trading near record highs.

At 7.25pm Singapore time, the dollar index was flat on the day at 90.141. The euro was down 0.1 per cent against the US dollar, at US$1.2159.

The Australian dollar, which is seen as a proxy for risk appetite, was up 0.2 per cent versus the US dollar at 0.77535.

Market participants were focused on US inflation data and the European Central Bank (ECB) meeting, both on Thursday.

Dovish rhetoric from ECB policymakers suggests the bank is in no hurry to slow the pace of buying under the 1.85 trillion euro (S$2.98 trillion) Pandemic Emergency Purchase Programme. But US Federal Reserve policymakers have begun inching towards a discussion about winding that help back.

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

China's yuan hovered around the key 6.40 level, with the offshore yuan changing hands at 6.3960.

China's export growth missed forecasts and imports grew at their fastest pace in 10 years in May, fuelled by surging demand for raw materials.

Elsewhere, the United States, Britain and other rich nations reached a deal on Saturday to squeeze more money out of multinational companies such as Amazon and Google and reduce their incentive to shift profits to low-tax offshore havens.

Investors were wary of how tech stocks would react, in terms of currency markets, but ING strategists said that the plans for a minimum global corporate tax rate of at least 15 per cent could result in a repatriation of global capital over a longer term which is positive for the US dollar.

In cryptocurrencies, bitcoin was up 2 per cent around US$36,535, while ether was up 4.2 per cent at US$2,825. REUTERS