Dollar softens, China inflation data takes centre stage

economictimes.indiatimes.com:

dollar was on the back foot on Monday after a miss in U.S. jobs data scaled back market expectations on how much further the Federal Reserve would need to raise rates, while focus in the Asia day was on China's inflation data release. The U.S.

economy added 209,000 jobs last month, data on Friday showed, marking the smallest increase in 2-1/2 years and the first time in 15 months that payrolls missed expectations. That sent the dollar tumbling nearly 1% against a basket of currencies on Friday while the yen and sterling surged. The Japanese yen last bought 142.30 per dollar in early Asia trade on Monday, having jumped 1.4% on Friday in the wake of the greenback's decline and a slump in U.S.

Treasury yields. [US/] The dollar/yen pair is particularly sensitive to U.S. yields as interest rates in Japan are anchored near zero.

«I suspect you got a market that was going into (the payrolls) high on expectations… so with that in mind, people pared back some of those dollar longs,» said Chris Weston, head of research at Pepperstone. «We've also seen large inflows back into the yen as well, we've seen some people looking to cover some of those yen shorts.» The British pound similarly firmed near an over one-year peak of $1.2850 hit on Friday and last traded $1.2829, as bets grow that stubborn inflation in the UK will force the Bank of England to raise interest rates to a 25-year high of 6.5% by December. The euro dipped marginally to $1.0958, paring some of its 0.7% gain on Friday, while the U.S.

dollar index rose 0.09% to 102.38 but remained not far from Friday's two-week low of 102.22. «I certainly don't trust that U.S. dollar move...whether it's sustained,» said Weston.