Dollar Down Over Disappointing U.S. Jobs Data, U.S. Stimulus Hopes

Dollar Down Over Disappointing U.S. Jobs Data, U.S. Stimulus Hopes

© Reuters.  © Reuters.

By Gina Lee – The dollar was down on Monday morning in Asia, starting the week on a down note as disappointing U.S. jobs data raised expectations of fresh economic stimulus measures, and pound investors monitored Brexit trade talks between the U.K. and the European Union (EU).

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.03% to 90.767 by 9:43 PM ET (1:43 AM GMT). The dollar hit a two and half year low, while the Euro climbed to its highest level since April 2018, during Friday’s session.

U.S. jobs data released on Friday disappointed, with manufacturing payrolls increasing by 27,000 in November, lower than both the 43,000 reading in forecasts prepared by and October’s 33,000 increase.

Non-farm payrolls grew by 245,000, much lower than the forecasted 469,000 and October’s rise of 610,000. It was also the smallest gain recorded since May. The unemployment rate fell to 6.7%, below the forecast 6.8% and October’s 6.9% rate.

The data suggested that job recovery is losing speed as the U.S. continues to battle a third wave of COVID-19 cases. However, investors are hopeful that the disappointing data will be a catalyst for Congress to pass the latest round of stimulus measures to aid the economic recovery.

“There was limited reaction to the soft number. Markets are focusing more on the prospects of more fiscal stimulus,” Barclays (LON:BARC) Capital, senior currency strategist Shinichiro Kadota told Reuters.

Talks over the stimulus measures seemed to gather momentum on Friday, with a bipartisan group of lawmakers working on perfecting their $908 billion bill, which they hope will be passed within the week. Congress has until Dec. 11 to pass the measures to avoid a government shutdown.

The USD/JPY pair inched down 0.08% to 104.06.

The AUD/USD pair inched up 0.09% to 0.7428, while the NZD/USD pair inched down 0.10% to 0.7038.

The USD/CNY pair inched up 0.10% to 6.5367. The offshore yuan hovered just shy of its two-and-a-half year high of 6.5070 seen on Friday. Meanwhile, Chinese trade data, including exports, imports and the trade balance, is due to be released later in the day.

The GBP/USD pair inched down 0.06% to 1.3429. The pound retreated from the two-and-a-half year high of $1.3540 seen on Friday, as all eyes are on the talks between the U.K. and the EU as the end-of-year deadline to reach a deal draws closer.

It had seen a fall to $1.3360 earlier, after talks over the weekend stalled over issues such as fishing rights waters around the U.K., fair competition and ways to solve future disputes.

British Prime Minister Boris Johnson and European Commission President Ursula von der Leyden are due to speak over the phone later in the day, with hopes that the differences over the issues will have narrowed by then.

Some investors remained optimistic, however.

“While it is hard to predict how the negotiations will go, I suspect sterling will be well-supported unless we have a complete breakdown in the talks,” Barclays’ Kadota added.

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