Dollar eases as traders bet Fed is done with rate rises

FILE PHOTO: U.S. dollar banknotes are displayed in this illustration taken, February 14, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

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On Monday, the dollar wavered in cautious trade as investors reviewed U.S. jobs data that showed some indications of softening, raising speculation that the Federal Reserve was nearing the end of its monetary tightening cycle.

The dollar fell 0.048% against a basket of currencies to 104.18, although it stayed close to the two-month high of 104.44 reached on August 25. In August, the index gained 1.7%, reversing a two-month losing run.

Due to the fact that US markets were closed on Monday, liquidity is expected to be tight and traders may be cautious to place substantial bets.

Data released on Friday revealed that job growth in the United States increased in August, but the unemployment rate increased to 3.8%, while pay gains slowed. The economy produced 110,000 fewer jobs in June than originally reported.

Investor focus will be on a number of Fed officials due to speak this week for clues on what the U.S. central bank would do at its next policy meeting on Sept. 19-20.

Markets are pricing in a 93% chance of the Fed holding steady on rates this month, and over a 60% probability of no more hikes this year, CME FedWatch tool showed.

The yen strengthened 0.06% to 146.16 per dollar. The Asian currency has traded around the psychologically important 145 level since the middle of August, with traders keeping an eye out for any signs of intervention.

Japan intervened in currency markets last September when the dollar rose past 145 yen, prompting the Ministry of Finance to buy the yen and push the pair back to around 140 yen.

The euro was up 0.06% to $1.078, while sterling was at $1.2602, up 0.11% on the day.

The Australian dollar added 0.2% to $0.6463 ahead of the Reserve Bank of Australia policy meeting on Tuesday when it are expected to stand pat. A Reuters poll showed that all but two of 36 economists said the RBA would hold its official cash rate at 4.10% on Sept. 5.

In cryptocurrencies, bitcoin rose 0.95% to $25,997.50. Ethereum , gained 0.67% to $1,638.30.

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