Dollar near one-month low on bets for later Fed taper

The dollar index, which measures the currency against six rivals, edged 0.05 per cent higher to 92.155, after dipping to 91.941 for the first time since August 4 on Friday, when a closely watched US labour report came out much weaker than expected. — Reuters pic
The dollar index, which measures the currency against six rivals, edged 0.05 per cent higher to 92.155, after dipping to 91.941 for the first time since August 4 on Friday, when a closely watched US labour report came out much weaker than expected. — Reuters pic

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TOKYO, Sept 6 — The dollar languished near a one-month low versus major peers yesterday, as investors pushed back expectations for when the Federal Reserve will begin tapering its massive stimulus.

The dollar index, which measures the currency against six rivals, edged 0.05 per cent higher to 92.155, after dipping to 91.941 for the first time since August 4 on Friday, when a closely watched US labour report came out much weaker than expected.

The euro was flat at US$1.18775 after matching the highest level since June 29 at US$1.1909 at the end of last week. The single currency has been supported by expectations the European Central Bank, which meets Thursday, is close to tapering its own stimulus programme.

The greenback edged 0.1 per cent higher to 109.79 yen, still meandering in the middle of its trading range of the past two months.

US 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 stalling hiring.

The Fed has made a labour market recovery a condition for paring back its pandemic-era asset purchases.

Commonwealth Bank of Australia pushed back expectations for a start to tapering to December from October following the jobs miss.

“The US’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 0.17 per cent to US$0.7435, but remained close to its highest since July 15 of US$0.74775, touched in the previous session. The Reserve Bank of Australia decides policy tomorrow.

National Australia Bank predicts the central bank 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 0.07 per cent to US$0.71445, after rising as high as US$0.7170 on Friday for the first time 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 about flat at US$51,785.60, after earlier touching US$51,920, a level not seen since May 12.

Smaller rival ether traded little changed at US$3,942.77 after topping US$4,000 last week for the first time since mid-May. — Reuters

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