Dollar near one-month low on bets Fed to delay taper

FILE PHOTO: A picture illustration shows U.S. 100-dollar bank notes taken in Tokyo August 2, 2011. REUTERS/Yuriko Nakao/File Photo

By Kevin Buckland

TOKYO (Reuters) - The dollar hovered near a one-month low versus major peers on Monday, after a weaker-than-expected jobs report fuelled some expectations that the U.S. Federal Reserve could delay the start of its stimulus tapering.

The dollar index, which measures the currency against six rivals, edged 0.1% higher to 92.201, after dipping to 91.941 for the first time since Aug. 4 on Friday, when a closely watched U.S. labour report showed the world's largest economy created the fewest jobs in seven months in August.

The euro eased 0.08% to $1.18685 after matching the highest level since June 29 at $1.1909 at the end of last week. The single currency has been supported by expectations the European Central Bank, which meets on Thursday, is close to tapering its own stimulus programme.

The greenback edged 0.09% higher to 109.785 yen, still meandering in the middle of its trading range of the past two months.

The value of speculators' net long U.S. dollar position grew to its largest since March 2020, reaching nearly $11 billion in the week ended Aug. 31, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday.

U.S. nonfarm payrolls increased by just 235,000 in August, compared with a 728,000 median forecast by economists in a Reuters poll, as a resurgence in COVID-19 infections weighed on demand at restaurants and hotels and stalled hiring in the leisure and hospitality sector.

However, average hourly earnings jumped 0.6%, the result of worker shortages caused by the pandemic.

It paints a complicated economic picture for the Fed, which has to balance keeping inflation in check against its new commitment to a broad labour market recovery.

The next clues on whether Friday's numbers saw employment stray from the Fed's test of "substantial further progress" may come Wednesday when New York Fed President John Williams speaks on the economic outlook.

Fed Chair Jerome Powell reiterated in August the U.S. central bank will continue its asset purchases at the current pace until they see "substantial further progress toward our maximum employment and price stability goals."

U.S. markets were closed on Monday for a holiday.

Three major Australian banks said on Monday they had pushed back their expectations for the start of Fed tapering following the U.S. jobs report.

Commonwealth Bank of Australia now expects Fed tapering to start in December from October previously.

"The U.S.'s deteriorating COVID situation will weigh on the USD because the situation is better elsewhere in the major economies," CBA strategists wrote in a client note.

Australia's dollar weakened 0.19% to $0.7434, but remained close to Friday's $0.74775, which was its highest since July 15. The Reserve Bank of Australia decides on monetary policy on Tuesday.

National Australia Bank predicts the RBA will reduce asset purchases again at the meeting, "although the optics of tapering amid protracted lockdowns means it is likely to be a close decision," NAB analyst Tapas Strickland wrote in a report.

New Zealand's kiwi slipped 0.2% to $0.7139, after rising to $0.7170 on Friday - its highest since June 11.

Following strong two-week rallies, both the Aussie and kiwi "appear to have firmly broken out of recent ranges," Strickland said.

In cryptocurrencies, bitcoin was roughly flat at $51,774.43, after earlier touching $51,988.42, a level not seen since May 12.

Smaller rival ether traded slightly weaker at $3,925.98 after topping $4,000 last week for the first time since mid-May.

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Currency bid prices at 0543 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar

$1.1868 $1.1880 -0.09% -2.86% +1.1888 +1.1865

Dollar/Yen

109.7900 109.6400 +0.17% +6.33% +109.8400 +109.7650

Euro/Yen

130.29 130.30 -0.01% +2.66% +130.5000 +130.2800

Dollar/Swiss

0.9148 0.9139 +0.10% +3.40% +0.9150 +0.9138

Sterling/Dollar

1.3847 1.3861 -0.08% +1.37% +1.3867 +1.3844

Dollar/Canadian

1.2539 1.2533 +0.06% -1.52% +1.2544 +1.2515

Aussie/Dollar

0.7434 0.7449 -0.20% -3.36% +0.7454 +0.7427

NZ

Dollar/Dollar 0.7139 0.7151 -0.20% -0.62% +0.7167 +0.7137

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(Reporting by Kevin Buckland; Editing by Gerry Doyle and Ana Nicolaci da Costa)

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