The dollar held firm on Monday as investor focus shifted to the U.S. labour market, following softer-than-expected inflation data last week that has done little to soothe concerns about the Federal Reserve dialling down its monetary stimulus.
The dollar’s index against six other major currencies rose 0.1% to 91.870, having recovered from Friday’s low of 91.524 hit in the wake of the inflation readings.
The euro fell 0.1% to $1.1923, as it struggled to recover the $1.20 level, while the dollar hovered at 110.67 yen, not far from Wednesday’s 15-month high of 110.105.The U.S. personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, increased 0.5%, short of expectations for a 0.6% rise.
“Nonetheless the rise in core PCE to 3.4% year-on-year in May was the biggest jump since 1992 and markets remain cautious if the Fed will normalise (policy) earlier,” analysts at Maybank in Singapore said in a note on Monday.
Signs of a tight labour market have also kept many investors fretting over wage-driven price pressures. Among a raft of economic indicators this week, Friday’s payroll data is a key focus – with economists expecting an increase of 675,000 jobs.
