The dollar remains stable as traders bet Fed has ended rate hikes

4 Sep 2023 , 10:12 AM

Investors evaluated U.S. jobs data on Monday, which indicated some signs of slowing and boosted predictions that the Federal Reserve was likely nearing the end of its cycle of monetary tightening. The dollar opened the day on a solid note.

The U.S. labour market expanded in August, according to data released on Friday, but the unemployment rate increased to 3.8%, while pay growth slowed. 110,000 fewer jobs were created than originally estimated in the economy in June and July.

According to the CME FedWatch tool, markets are pricing in a 93% chance of the Fed keeping interest rates unchanged this month and a 60% chance that there won’t be any more increases this year.

The dollar was little changed against a basket of currencies, trading at 104.20, although it was still near to the two-month high of 104.44 it reached on August 25. In August, the index increased 1.7%, ending a two-month losing run. Monday is a market-free day in the US.

A series of economic indicators, including falling inflation and a loosening labour market, have added to the sense that the U.S. economy is slowing down without abruptly slowing down, bolstering expectations for a gentle landing.

Investors will be watching several Fed officials who are scheduled to speak this week for hints about what the U.S. central bank will do at their upcoming policy meeting on September 19–20.

The Japanese yen increased 0.03% to 146.18 per dollar, recovering slightly from its 0.5% decline on Friday following the employment report. Since the middle of August, the Asian currency has fluctuated around the psychologically significant 145 level as traders watch out for any prospective interventions.

When the dollar climbed beyond 145 yen in September of last year, Japan interfered in the currency markets by purchasing the yen, which caused the pair to fall back to about 140 yen.

While sterling was last at $1.2596, up 0.06% on the day, the euro was up 0.05% to $1.0778.

Before the Reserve Bank of Australia policy meeting on Tuesday, when they are anticipated to hold steady, the Australian dollar increased by 0.17% to $0.646. All but two of the 36 economists surveyed by Reuters predicted that the RBA would maintain its official cash rate at 4.10% on September 5.

This week’s scheduled meeting of the Canadian central bank is expected to result in a rate hold. At 1.36 to the dollar, the Canadian dollar was unchanged.

Bitcoin was most recently trading up 0.58% at $25,901.24 in the cryptocurrency market. Inching up 0.45% to $1,634.65, Ethereum.

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