FOREX-Dollar finds footing as traders look to key U.S. inflation gauge

  • 6/8/2021
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* Graphic: World FX rates tmsnrt.rs/2RBWI5E By Hideyuki Sano TOKYO, June 8 (Reuters) - The U.S. dollar found support on Tuesday as investors looked to U.S. inflation data due later in the week after softer-than-expected jobs data eased but did not dispel concerns about early tapering of the Federal Reserve"s monetary stimulus. The euro fetched $1.2178, a bounce back from a three-week low of $1.2104 set on Friday, but slightly below its 20-day moving average. The dollar also crept back through its 20-DMA against the yen, and rose 0.15% to 109.42 yen. The dollar"s index against a basket of six major currencies stood at 90.059, not far from 89.533, a 4 1/2-month low touched late last month. It has been idling around there while investors try and gauge the U.S. recovery and policy response. "Worries remain that the Fed may start discussing tapering asset purchases at next week"s FOMC meeting," said Philip Wee, an FX strategist at Singapore"s DBS Bank. "More so after U.S. Treasury Secretary Janet Yellen"s comment that higher U.S. interest rates would be good for the economy," he added. Yellen said slightly higher rates "would actually be a plus for society"s point of view and the Fed"s point of view," during a weekend interview with Bloomberg. Still, Friday"s jobs data, which showed U.S. non-farm payrolls increasing by 559,000 in May, came in below expectations and eased concern about the Fed acting soon. "It"s not that the payrolls numbers were weak. But because so much expectation had been built up in advance, the dollar suffered a bit of setback," said Shinichiro Kadota, senior currency strategist at Barclays. The data helped to pin down U.S. bond yields near their recent lows, weighing on the dollar, while investors now looked to consumer price data on Thursday for fresh direction. But nerves about strong readings, which could boost the case for tapering, are also giving the dollar some underlying support. Many investors now expect the Fed to unveil a plan to reduce its bond purchase later this year, and actual tapering to start early next year. The British pound fell 0.1% to $1.4157 and the Australian dollar eased slightly to $0.77444, even though both stuck in ranges seen over the past couple of months. With recent trading channels tight, implied volatilities on both currencies have dropped to their lowest levels since early 2020, before markets were pummelled by the COVID-19 pandemic. Elsewhere, the Mexican peso held firm at 19.835 to the U.S. dollar, near its highest level since late January, after midterm elections confirmed President Andres Manuel Lopez Obrador"s MORENA party as the strongest force in the country, but with a reduced majority. In contrast, the Peruvian sol tumbled to an all-time low of 3.9367 per dollar as socialist Pedro Castillo edged ahead of right-wing rival Keiko Fujimori in the country"s presidential election vote. Cryptocurrencies were also heavy. Bitcoin eased 2% to a three-week low of $32,418, while ether fell 4% to a one-week low of $2,431.93. ======================================================== Currency bid prices at 432 GMT Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.2178 $1.2190 -0.09% -0.32% +1.2194 +1.2178 Dollar/Yen 109.4150 109.2600 +0.15% +5.94% +109.4350 +109.2100 Euro/Yen Dollar/Swiss 0.8980 0.8976 +0.04% +1.50% +0.8980 +0.8974 Sterling/Dollar 1.4157 1.4177 -0.14% +3.62% +1.4184 +1.4157 Dollar/Canadian 1.2088 1.2083 +0.06% -5.06% +1.2090 +1.2078 Aussie/Dollar 0.7747 0.7756 -0.13% +0.70% +0.7763 +0.7743 NZ 0.7216 0.7230 -0.18% +0.49% +0.7232 +0.7216 Dollar/Dollar All spots Tokyo spots Europe spots Volatilities Tokyo Forex market info from BOJ (Reporting by Hideyuki Sano in Tokyo; Additional reporting by Tom Westbrook in Singapore; Editing by Ana Nicolaci da Costa) Our Standards: The Thomson Reuters Trust Principles.

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