The dollar index traded in a slight 92.79-92.60 range on Monday, heading toward the end of the U.S. session little changed with flows among major currencies light amid end of summer doldrums and UK summer bank holiday.
Markets remain in a holding pattern owing to summer liquidity and reluctance to add to positions ahead of PMI data on Wednesday and U.S. non-farm payrolls data on Friday.
In the event of an upbeat employment and wage report investors might expect Fed Chair Jerome Powell to move up the U.S. asset taper schedule, which is seen as a precursor to rate hikes event though the U.S. central bank has tried to sever any links between the two.
EUR/USD was closing flat on the day at 1.1798, shrugging off rising German HICP inflation, which was in line with expectations.
USD/JPY gained 0.04% to 109.90, trading in a 109.96-109.70 range.
Despite Friday’s dovish Powell comments, the Fed is expected to begin taper in the near-term and rates are expected to begin rising in H2 2022, well ahead of BOJ hikes which futures price in H2 2025.
GBP/USD fell 0.02% by late trade to 1.3757.
Sterling bulls were rebuffed within the daily cloud for the second straight session.
Resistance is seen at 1.3793, the 50% Fibo of the 1.3984-1.3502 July-August dip.
AUD/USD led majors lower, falling 0.2% and trading in a 0.7319-0.7286 range, the aussie recovering off Asia lows after oil and copper rallied.
Treasury yields slipped a touch as Powell’s stall on taper is seen keeping U.S. rates lower-for-longer.
U.S. Eurodollar prices rose 4 basis points, pushing implied rates lower, in the blue/green contracts, as last week's hawkish Fed tones by Fed non-voters were dialed back after Powell’s Jackson Hole address.
Stocks were mixed, S&P Index was +0.6%, the Dow flat and equity volatility slipped a touch.
Bitcoin pared early NorAm losses, at $48.3k, down 1% with 200-DMA support by $46.1k holding but bulls reluctant to test resistance by $50k.
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