Dollar edges lower; Fed meeting looms large
Investing.com — The U.S. dollar edged lower in early European trade Monday, in thin holiday-affected volumes as traders continued to digest last week’s mixed U.S. jobs report and the possible impact on thinking at the Federal Reserve ahead of this month’s policy-setting meeting.
At 02:55 ET (06:55 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 104.075, remaining close to last week’s two-month peak of 104.44.
Friday’s jobs report offered up a mixed picture — job growth picked up more than expected in August, but the U.S. economy created 110,000 fewer jobs than previously reported in June and July, the unemployment rate jumped to 3.8%, while wage gains moderated.
Importantly, there was a huge 736,000 jump in the workforce, which provided hope that an expansion in labour supply could further ease wage pressures even while hiring stays strong.
Traders have tended to read into this that the Fed will stand pat with its monetary policy later this month, weighing on the dollar.
That said, this also added to the impression the U.S. economy is cooling without slowing sharply, reinforcing hopes that the economy is set for a soft landing — a view that could support the greenback longer term as the economies in Europe, as well as Asia, struggle.
Data released this week is unlikely to substantially change the market’s view, but traders will also get the chance to hear from several Fed speakers, including Dallas Fed President Lorie Logan, who speaks Wednesday followed a day later by appearances from New York Fed President John Williams, Governor Michelle Bowman, Governor Michael Barr and Chicago Fed President Austan Goolsbee.
EUR/USD rose 0.2% to 1.0794, with the
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