By Ray Wee
SINGAPORE (Reuters) – The dollar fell on Monday, but remained close to a two-year peak, as traders awaited a group of US economic data this week, led by the non-farm payrolls report in December, in search of more evidence of the expectations of the Federal Reserve (the US central bank). for the interest rate.
In Canada, a source told Reuters that it is increasingly likely that Prime Minister Justin Trudeau will announce his intention to step down, although he has not made a final decision. The Globe and Mail previously reported that Trudeau is expected to announce his resignation on Monday.
Markets appear to have largely figured this out and may welcome an election to clear things up, leaving the US dollar down 0.36% against its Canadian counterpart to C$1.4395.
Focus was also on the Chinese yuan, which on Friday fell past the psychological level of 7.3 per dollar in the local market for the first time in 14 months, after the People's Bank of China strongly defended that key threshold for most currencies. December.
The dollar fell to a 16-month low of 7.3289, while its offshore counterpart rose 0.06% to 7.3558.
“The People's Bank of China (PBOC) appears to have stopped defending the 7.30 level,” said Ray Attrill, head of FX strategy at National Australia Bank (OTC:) (NAB).
“This brings more attention to what the People's Bank of China is doing from a stabilization perspective today and in the coming days, in terms of whether or not they actually now allow the USD/CNY to trade in a higher trading range, because I do. I think that will have implications.” On the broader Asian currencies, but also on and.
Before the market opened on Monday, the People's Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2% range, at 7.1876 per dollar.
The Australian and New Zealand dollars, often used as liquid proxies for the yuan, were unaffected by the Chinese currency's lower move on Friday, trading roughly 0.2% higher in the Asian session.
The Australian dollar last bought $0.6227, while the New Zealand dollar rose 0.22% to $0.56245.
Trump and prices
In the broader market, investors focused their attention on the closely watched US jobs report on Friday for more clarity on the health of the world's largest economy.
A slew of Fed policymakers are also scheduled to speak this week, where they are likely to reiterate recent comments from their colleagues that the battle against taming inflation is far from over.
The dollar continued to draw strength from expectations of tapering Federal Reserve cuts this year, with its rise to a two-year high last week pushing the euro to its weakest level in more than two years.
The single currency was little changed recently at $1.0310, while the currency fell slightly to 108.89.
The British pound rose 0.13 percent to $1.2440. The yen fell 0.24 percent to 157.66 yen to the dollar.
The dollar was also provided with additional safe-haven support due to uncertainty over US President-elect Donald Trump's plans to impose massive import tariffs, tax cuts and immigration restrictions upon his inauguration on January 20.
“There is still a lot of uncertainty about how quickly we will see policy announcements and how well the reality matches the rhetoric, so I think that leaves a huge amount of uncertainty in the markets,” NAB's Attrill said.
“It's really hard to see the US dollar taking any damage… Right now, you have to be very brave to bet against continued dollar strength.”
