By Hannah Lang and Greta Rosen Fondahn
NEW YORK/LONDON (Reuters) – The euro held steady against the dollar in skittish trading on Monday as investors awaited U.S. inflation data later this week, while the Australian and New Zealand dollars recovered after China announced a “suitably accommodative” next year monetary policy had promised. .
While markets have priced a quarter-point rate cut from the U.S. Federal Reserve next week as a virtual certainty, investors await data on U.S. consumer prices on Wednesday.
“The rise in unemployment we saw in November actually strengthens the case for a 25 basis point cut next Wednesday,” said Michael Brown, senior research strategist at Pepperstone.
“The Fed is currently much more focused on the labor market than on inflation developments,” he added.
Data on Friday showed US job growth rose sharply in November, but a rise in the unemployment rate to 4.2% pointed to a loosening labor market that should allow the Fed to cut rates again this month.
The euro rose against the dollar at $1.0576 after earlier falling as much as 0.3%, while the dollar rose 0.78% against the yen to 151.200.
The Australian dollar gained 1.15% against the dollar, rising 0.79% after China announced a shift in monetary policy to boost growth.
The two currencies often serve as proxies for the , which strengthened in the offshore market, sending the dollar down 0.27% at 7.2650.
China will adopt “appropriately accommodative” monetary policy next year as part of steps to support economic growth, and will adopt a more proactive fiscal policy and step up “unconventional” countercyclical adjustments, state media reported on Monday, citing a Politburo meeting . .
“This is a market right now that wanted to hear good signals about global growth, so receptive ears were found,” said Adam Button, chief currency analyst at ForexLive. “We have heard promises from China before, but again they are given the benefit of the doubt.”
The dollar rose 0.35% against the South Korean won. Last weekend, South Korean President Yoon Suk Yeol survived an impeachment vote in parliament following his short-lived attempt to impose martial law last week.
Mizuho (NYSE:) Banking strategist Vishnu Varathan pointed to a host of geopolitical developments, such as the fall of Syrian President Bashar al-Assad this weekend, in addition to macro and President-elect Donald Trump-related trades that are giving markets further impetus to go long dollars to stay. .
“There is no reason to short the dollar against any currency,” he said.
Last week’s headliner, bitcoin, which reached six figures for the first time at a record $103,649, was last at $98,454.
CENTRAL BANK MEETINGS
The main events investors are watching this week are the ECB’s policy meeting on Thursday, where a quarter-point cut is baked in, and the Chinese Central Economic Working Conference behind closed doors.
The Bank of Canada, the Swiss National Bank and the Reserve Bank of Australia are meeting this week, with the first two expected to make deep interest rate cuts that could further narrow yield differentials against their currencies.
The Canadian dollar was trading near a 4.5-year low on Monday as markets expect another major rate cut.
