Dollar gains as Friday's losses seen overdone; Fed comments lend support
By Gertrude Chavez-Dreyfuss and Joice Alves
NEW YORK/LONDON (Reuters) — The dollar rose against major currencies on Monday, with Friday's losses following a mixed U.S. jobs report seen by some investors as excessive given the economy remains resilient and the labor market is still tight.
Federal Reserve official comments supporting additional interest rate hikes also underpinned the dollar.
The euro declined 0.2% against the dollar to $1.0995. It weakened after data on Monday showed German industrial production dropped more strongly than forecast in June, underlining the challenges faced by the manufacturing sector amid a downturn in Europe's largest economy.
Against the yen, the dollar gained 0.2% to 142.06 yen, while advancing 0.2% as well versus the Swiss franc to 0.8748 francs.
The dollar index was last little changed at 102.08. It fell to a one-week low last Friday in the wake of a U.S. non-farm payrolls report that came out weaker than expected.
«We're...looking at a correction (in the dollar) from the market's rather outsized reaction to Friday's non-farm payroll numbers,» said Helen Given, FX trader, at Monex USA in Washington.
«While U.S. employment data did come in below expectation, it wasn't enough of a downside hit to justify Friday's U.S. dollar losses and the overall economic picture remains strong.»
The broad strength of the U.S. economy was further underscored by Fed Governor Michele Bowman on Monday who said additional interest rate hikes will likely be needed in order to lower inflation to the U.S. central bank's 2% target.
Bowman, in remarks prepared for delivery to a «Fed Listens» event in Atlanta, said she backed the latest rate increase last month because inflation remains too elevated, and job
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