Investing.com – The US dollar was steady on Monday, as traders awaited Federal Reserve Chairman Jerome Powell’s speech later in the session ahead of Friday’s key employment report.
At 04:25 EST (08:25 GMT), the dollar index, which tracks the US currency against a basket of six other currencies, fell marginally to 100.035, after last week recording its fourth consecutive weekly decline and ninth in a row. last 10.
Dollar looks to payroll
The US dollar fell last week after price pressures signaled by the Federal Reserve continued to ease, shortly after the US central bank began its interest rate cutting cycle.
Federal Reserve Chairman Jerome Powell is scheduled to speak Monday before the National Association for Business Economics in Nashville, Tennessee, and is expected to detail the Fed’s decision to cut its benchmark interest rate by half a percentage point earlier this month.
The group’s poll of forecasters, released on Sunday, cited a “mistake in monetary policy” as the “biggest downside risk to the US economy over the next 12 months.”
The next major data point that could guide the pace of US interest rate cuts will arrive in the form of the October report on Friday, with economists expecting the US economy to add 144,000 jobs.
“The Fed’s greater focus on the employment side of its mandate means higher market sensitivity to the details of the issue,” analysts at ING said in a note. “If we are correct in our call for higher unemployment, expect the dollar to decline as markets hold on to expectations of a half-percentage-point Fed cut in November or December.”
Euro prepares for inflation release
In Europe, it rose 0.1% to 1.1172, largely flat ahead of preliminary September inflation data on Tuesday, which will be closely watched as European Central Bank officials consider cutting interest rates again in October.
The German inflation figures come ahead of , and follow data last week that showed inflation in France and Spain rising less than expected, boosting expectations of an interest rate cut by the European Central Bank in October.
“If we end the week with slower-than-expected inflation in the euro zone and somewhat weaker US payroll numbers that favor a 50 basis point Fed cut, expect the euro to be one of the laggards in a weak US dollar environment as markets boost bets that the central bank The European will do that.” “Continuing the reduction in October,” ING said.
“Another short-term move to 1.1200 for EUR/USD is possible on the back of some US dollar weakness, but unless we see surprisingly strong inflation in the Eurozone, there may not be a major rally on the horizon.”
It traded 0.2% higher at 1.3399, not far from last week’s high of 1.3430, rising to a level not seen since February 2022.
Data released earlier Monday showed that the second quarter grew more slowly than previously thought, with gross domestic product expanding 0.5% in the April-June period.
The reading was slightly weaker than the initial estimate of 0.6%, and was below expectations for a further rise of 0.6%.
The yen is regaining some gains
It rose 0.2% to 142.44, with the Japanese yen giving up some of last week’s gains, as the country’s next prime minister indicated that monetary policy must remain accommodative.
The yen jumped on Friday when Shigeru Ishiba, a former defense minister and former critic of soft policy, won leadership of the ruling Liberal Democratic Party.
In addition, the Japanese index fell by 3.3% month-on-month in August, while it fell by 5.1% year-on-year.
It rose to 7.0120, holding steady after a raft of stimulus measures in Beijing sent the Chinese yuan higher last week, breaking below the psychological level of 7 per dollar on Friday.