Investing.com – The U.S. dollar rose on Monday, holding at elevated levels following better-than-expected U.S. jobs data, while the pound continued to struggle to find friends.
At 04:35 ET (0935 GMT), the dollar index, which tracks the dollar’s performance against a basket of six other currencies, rose 0.4% to 109.930, after reaching its highest level on Friday. high from October 2022.
The dollar remains firm awaiting the CPI
The dollar received a boost after data on Friday showed U.S. growth unexpectedly accelerated in December while falling to 4.1%, prompting traders to reduce their bets on U.S. rate cuts. Federal Reserve this year.
Markets are now pricing in just 27 basis points of Fed rate cuts this year, down from about 50 basis points at the start of the year.
“Friday’s strong U.S. jobs release has provided another boost to the dollar. “It is difficult to see the dollar trend changing this week given the prospect of another strong set of US inflation data, which will increasingly raise the question of whether the Federal Reserve needs to cut rates this year,” analysts at ING, in a report. note.
Data on December inflation in the United States is released on Wednesday, and any bullish surprise could threaten to completely close the door to easing.
Sterling remains weak
In Europe, it traded 0.7% lower at 1.2117, with sterling falling to a 14-month low, after falling 1.8% last week, amid growing concern over Britain’s finances. Britain, causing borrowing costs to rise.
“Sterling continues to trade in soft ground and its losses could extend this week,” ING added. “Wednesday will be the most important day for sterling as this is when UK CPI data for December is released. It is very possible that the British pound will be affected regardless of the number that comes out. “Persistent inflation and what it means for the Bank of England cycle could mean more trouble for the UK bond market.”
fell 0.4% to 1.0195, falling to its weakest level since October 2022, and is widely expected to cut interest rates by around 100 basis points in 2025, with most of the cuts coming in the first half of the year, as inflation is seen heading towards the bank’s 2% target by mid-2025.
“With US rates rising and the dollar doing very well (up 8% since the end of September), it wouldn’t be a surprise to hear some central bankers turn a little less dovish to provide some support to their troubled currencies,” ING said. .
“However, today in Hong Kong, the European Central Bank’s chief economist, Philip Lane, preferred to say that without further cutting rates, the ECB’s inflation target would be at risk. Therefore, it appears that the ECB is not particularly concerned about the weak EUR/USD levels as calls for peg increase.”
Yuan lacks support
In Asia, it fell 0.3% to 157.23, as volumes were affected by the holiday in Japan and traders remain uncertain about a meeting.
rose 0.3% to 7.3574, even as data showed China grew more than expected in December, helped by outsized exports.
But the reading was largely tied to exporters bringing forward their shipments before U.S. President-elect Donald Trump imposed heavy trade tariffs on the country. Trump, who will take office on January 20, has promised to impose tariffs on China from “day one” of his presidency.