Forex trends Monday: US dollar loses ground after US jobs data disappoint

U.S. one-dollar and five-dollar currency notes; taken September 2018.U.S. one-dollar and five-dollar currency notes; taken September 2018.

The U.S. dollar lost ground on Friday after jobs data disappointed, with analysts saying they expected the greenback could face further declines as weaker economic data suggests the U.S. Federal Reserve may soon pause its interest rate hikes.

On Friday, the U.S. non-farm payrolls report showed a 155,000 rise in jobs in November, missing a Reuters poll forecast for 200,000, while wages also rose less than expected, Reuters reported.

Appetite for the dollar diminished on Friday after November’s disappointing U.S. jobs report reinforced expectations over the Fed taking a pause on rate hikes next year,” Lukman Otunuga, research analyst at FXTM, said in a note on Friday. 

Other analysts were expecting a longer term decline in the greenback.

Oliver Jones, markets economist at Capital Economics, said in a note on Friday that he expected the dollar to weaken and the 10-year Treasury note yield would fall further in the new year.

“Investors have continued to adjust their expectations for Fed policy, and are now banking on just two more rate hikes by the end of next year, compared to three a few weeks ago,” he said.

“However, investors are still a long way from discounting the big rate cuts that we think will eventually come onto the agenda as the U.S. economy falters. So we would not be surprised to see the 10-year Treasury yield fall further, from 2.9 percent now to about 2.5 percent by end-2019,” Jones said.

“As Treasury yields continue to decline next year, we suspect that the dollar will weaken slightly against other developed market currencies even if some of the factors which have boosted it this year, like the trade war and the budget dispute in Italy, continue,” he added.

Currencies

The U.S. dollar index was at 96.71 at Friday’s close after trading as high as 96.91 during the session, according to ICE futures data.

The 10-year U.S. Treasury note yield was at 2.852 percent at Friday’s close after falling from levels as high as 2.907 percent on during the session, according to Tullett Prebon data.

The euro/dollar was at 1.1397 at 6:45 A.M. SGT after trading in a 1.1359 to 1.1424 range on Friday, according to DZHI data.

The British pound/dollar was at 1.2711 at 6:45 A.M. SGT after trading in a 1.2709 to 1.2790 range on Friday, according to DZHI data.

The dollar/yen was at 112.637 at 6:45 A.M. SGT after trading in a 112.52 to 112.928 range on Friday, according to DZHI data.

The dollar/yuan ended Friday at 6.8732 after trading in a 6.8657 to 6.8894 range during the session, according to DZHI data.

The dollar/Singapore dollar was at 1.3704 at 6:45 A.M. SGT after trading in a 1.3676 to 1.3710 range on Friday, according to DZHI data.

The dollar/Malaysian ringgit ended Friday at 4.16450 after trading in a 4.1525 to 4.1670 range during the session, according to DZHI data.

The dollar/Indonesian rupiah ended Friday at 14,465 after trading in a 14,450 to 14,531 range during the session, according to DZHI data.

 

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