The U.S. dollar began the week on the downturn slope due to the U.S. jobs data. On Friday, the report showed numbers lower than analysts forecasted, dampening the demand on the safe-haven greenback. However, later today, the currency climbed up again.
Investors were encouraged by the jobs data. However, it showed that a pick-up in job growth was not significant enough to raise expectations for the U.S. Federal Reserve to tighten its monetary policy sooner. Still, risk appetite wasn’t high in forex markets during the early trading. Equities have also tumbled down amid caution in global markets ahead of the European Central Bank meeting and U.S. inflation data, both of which are due on Thursday.
The dollar index climbed up 0.2% at 90.283 on Monday. Meanwhile, the euro plummeted down by 0.2% against the greenback, at $1.21465. The Australian dollar also decreased by 0.2% at 0.7727.
ECB policymakers are making dovish comments, indicating that the bank is in no hurry to slow the pace of buying under the 1.85 trillion-euro Pandemic Emergency Purchase Programme (PEPP). On the other hand, U.S. Federal Reserve policymakers have begun hinting that they contemplate winding that help back.
MUFG currency analyst Lee Hardman noted that a divergence has opened up between the ECB and Fed recently, as the latter has signaled a willingness to discuss QE tapering soon. He also added that it would help hinder upward momentum for EUR/USD pair. Nevertheless, such developments are insufficient to alter analysts’ bullish outlook on the pair beyond the near term.
How Did the Chinese Yuan Fare?
The Chinese yuan traded around the key 6.40 level on Monday, with the offshore yuan remaining at 6.3961. China’s export growth missed the latest forecasts. However, imports grew at their fastest pace in 10 years in May, bolstered by the soaring demand for raw materials.
Commerzbank senior economist Hao Zhou stated that the trade sector continues the strong performance. That means the manufacturing sector is playing the leading role in the post-pandemic recovery. Despite that, the trade data might have little forex market impact, as the government promised to keep a stable currency for the time being.