Dollar near one-month low on bets for later Fed taper

September 6, 2021

By Kevin Buckland

TOKYO (Reuters) – The dollar languished near a one-month low versus major peers on Monday, as investors pushed back expectations for when the Federal Reserve will begin tapering its massive stimulus.

The dollar index, which measures the currency against six rivals, edged 0.05% higher to 92.155, after dipping to 91.941 for the first time since Aug. 4 on Friday, when a closely watched U.S. labour report came out much weaker than expected.

The euro was flat at $1.18775 after matching the highest level since June 29 at $1.1909 at the end of last week. The single currency has been supported by expectations the European Central Bank, which meets Thursday, is close to tapering its own stimulus programme.

The greenback edged 0.1% higher to 109.79 yen, still meandering in the middle of its trading range of the past two months.

U.S. nonfarm payrolls increased by just 235,000 in August, compared with a 728,000 median forecast by economists in a Reuters poll, as a resurgence in COVID-19 infections weighed on demand at restaurants and hotels, and stalling hiring.

The Fed has made a labour market recovery a condition for paring back its pandemic-era asset purchases.

Commonwealth Bank of Australia pushed back expectations for a start to tapering to December from October following the jobs miss.

“The U.S.’s deteriorating COVID situation will weigh on the USD because the situation is better elsewhere in the major economies,” CBA strategists wrote in a client note.

Australia’s dollar weakened 0.17% to $0.7435, but remained close to its highest since July 15 of $0.74775, touched in the previous session. The Reserve Bank of Australia decides policy on Tuesday.

National Australia Bank predicts the central bank will reduce asset purchases again at the meeting, “although the optics of tapering amid protracted lockdowns means it is likely to be a close decision,” NAB analyst Tapas Strickland wrote in a report.

New Zealand’s kiwi slipped 0.07% to $0.71445, after rising as high as $0.7170 on Friday for the first time since June 11.

Following strong two-week rallies, both the Aussie and kiwi “appear to have firmly broken out of recent ranges,” Strickland said.

In cryptocurrencies, bitcoin was about flat at $51,785.60, after earlier touching $51,920, a level not seen since May 12.

Smaller rival ether traded little changed at $3,942.77 after topping $4,000 last week for the first time since mid-May.

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Currency bid prices at 0058 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar

$1.1878 $1.1880 -0.01% -2.78% +1.1888 +1.1877

Dollar/Yen

109.8150 109.6400 +0.17% +6.33% +109.8300 +109.7650

Euro/Yen

130.44 130.30 +0.11% +2.77% +130.5000 +130.3500

Dollar/Swiss

0.9144 0.9139 +0.06% +3.36% +0.9145 +0.9138

Sterling/Dollar

1.3852 1.3861 -0.06% +1.39% +1.3867 +1.3852

Dollar/Canadian

1.2539 1.2533 +0.06% -1.52% +1.2542 +1.2515

Aussie/Dollar

0.7434 0.7449 -0.20% -3.36% +0.7454 +0.7433

NZ

Dollar/Dollar 0.7147 0.7151 -0.04% -0.46% +0.7167 +0.7145

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(Reporting by Kevin Buckland. Editing by Gerry Doyle)

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