Dollar sags after soft US wages data, Brexit woes weigh on pound
TOKYO: The dollar struggled near 3-1/2-week lows against its peers on Monday after US jobs data showed slower-than-expected wages growth, while the pound retreated as a key member of Britain's cabinet resigned over Prime Minister Theresa May's Brexit plan.
The dollar index against a basket of six major currencies was 0.1 per cent lower at 93.962..
It had lost nearly 0.5 per cent on Friday and stooped to 93.921, its lowest since June 14, after closely-watched US wages indicators disappointed the market.
Data on Friday showed average US hourly earnings gained five cents, or 0.2 per cent in June after increasing 0.3 per cent in May. This pointed to moderate inflation pressures that dented expectations that the Federal Reserve would raise interest rates a total of four times in 2018.
Nonfarm payrolls did rise by a stronger-than-expected 213,000 in June, Friday's data also showed, although this had little impact on currencies.
"The wages component has been the focal point for the market for a while now, rather than the nonfarm payrolls, and the dollar slipped accordingly. The flattening of the US yield curve, perhaps reflecting worries about the economic impact of trade conflicts, is also a key factor weighing on the dollar," said Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo.
The 10-year Treasury yield fell to its lowest level in nearly six weeks on Friday. As a result the spread between the two- and 10-year yields was at its flattest in 11 years.
The dollar was little changed at 110.42 yen after losing 0.2 per cent on Friday.
The euro was 0.1 per cent higher at $1.1752. The single currency had risen 0.45 per cent on Friday, when it brushed $1.1768, its strongest since mid-June.
The pound was effectively flat at $1.3295.
Sterling had climbed to $1.3328 earlier in the session, its highest since June 14, before pulling back after sources told Reuters British Brexit Secretary David Davis had resigned in a blow to Prime Minister Theresa May.
"The latest headlines are negative for the pound, but there are underlying expectations for the Bank of England to raise rates and that could help limit potential losses," Ishikawa at IG Securities said.
The dollar index against a basket of six major currencies was 0.1 per cent lower at 93.962..
It had lost nearly 0.5 per cent on Friday and stooped to 93.921, its lowest since June 14, after closely-watched US wages indicators disappointed the market.
Data on Friday showed average US hourly earnings gained five cents, or 0.2 per cent in June after increasing 0.3 per cent in May. This pointed to moderate inflation pressures that dented expectations that the Federal Reserve would raise interest rates a total of four times in 2018.
Nonfarm payrolls did rise by a stronger-than-expected 213,000 in June, Friday's data also showed, although this had little impact on currencies.
"The wages component has been the focal point for the market for a while now, rather than the nonfarm payrolls, and the dollar slipped accordingly. The flattening of the US yield curve, perhaps reflecting worries about the economic impact of trade conflicts, is also a key factor weighing on the dollar," said Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo.
The 10-year Treasury yield fell to its lowest level in nearly six weeks on Friday. As a result the spread between the two- and 10-year yields was at its flattest in 11 years.
The dollar was little changed at 110.42 yen after losing 0.2 per cent on Friday.
The euro was 0.1 per cent higher at $1.1752. The single currency had risen 0.45 per cent on Friday, when it brushed $1.1768, its strongest since mid-June.
The pound was effectively flat at $1.3295.
Sterling had climbed to $1.3328 earlier in the session, its highest since June 14, before pulling back after sources told Reuters British Brexit Secretary David Davis had resigned in a blow to Prime Minister Theresa May.
"The latest headlines are negative for the pound, but there are underlying expectations for the Bank of England to raise rates and that could help limit potential losses," Ishikawa at IG Securities said.