SINGAPORE- The dollar was steady on Monday ahead of a key US inflation report later in the week for further clarity on the Federal Reserve’s monetary policy outlook, after markets got off to a hesitant start to the year as rate cut bets were pared.
The yen struggled near the 145 per dollar level pressured by a broad bounce in the dollar, while the Australian and New Zealand dollars were nursing losses having fallen sharply last week amid cautious risk sentiment.
Trading was thinned in Asia with Japan out on a holiday.
Against the yen, the dollar rose 0.05 percent to 144.67, extending its gain from last week when it jumped 2.6 percent on the Japanese currency, its best weekly performance since June 2022.
The kiwi edged 0.1 percent higher to $0.6248, after having slid 1.2 percent last week. The dollar index steadied at 102.38.
The greenback’s rally was underpinned by a rebound in US Treasury yields as traders tempered their expectations of the pace and scale of Fed cuts this year.
A reading on US inflation due on Thursday could again alter those views, after data on Friday showed US employers hired more workers than expected in December while raising wages at a solid clip, pointing to a still-resilient labor market.
However, a separate survey out the same day showed the US services sector slowed considerably last month, with a measure of employment dropping to the lowest level in nearly 3-1/2 years, painting a mixed picture of the world’s largest economy.
“On balance, the key labor market themes remain in place. The labor market is no longer as tight as it was earlier in the recovery as signaled by slower job growth, less turnover and slower wage gains,” said economists at Wells Fargo of the nonfarm payrolls report.
“That said, job growth remains solid on an absolute basis even if it has slowed on a relative one, and the low level of layoffs remains encouraging.
