Laura Matthews
NEW YORK (Reuters) – The dollar strengthened on Monday, pushing its peers to multi-year lows after Friday’s crash. A U.S. jobs report underlined economic strength and raised growing doubts about the Federal Reserve cutting interest rates this year.
The gauge measuring the dollar against a basket of currencies rose 0.26% to 109.94. It rose to its highest level in more than two years early in the session, reaching a high of 110.17 and extending the recent rally.
U.S. job growth unexpectedly accelerated in December and the unemployment rate fell to 4.1%, causing investors to hold off on bets on interest rate cuts this year.
Markets are pricing in a 25-basis-point Fed rate cut for December after not yet fully pricing in one for 2025.
Due to the publication of Wednesday’s US inflation report, any positive surprise may further close the door to future monetary policy easing. Many Fed representatives will also give speeches this week.
“Given that markets are currently pricing in just over one rate cut by the end of the year, the reaction to the inflation print could be relatively measured,” said Uto Shinohara, senior investment strategist at Mesirow Currency Management in Chicago.
“A more critical turning point is Trump’s inauguration later this month, after which we will see whether Trump’s tariff threats are fully implemented or were merely a negotiating ploy.”
President-elect Donald Trump will return to the White House on Monday. His plans for high import tariffs, tax cuts and immigration restrictions could trigger inflation, raising expectations for a less aggressive monetary easing cycle.
The euro, losing 0.4% to $1.0208, hit its weakest level against the dollar since November 2022 at the start of the session. Last pound sterling fell 0.24% to $1.2167, after falling earlier in the day to the lowest level in 14 months.
The pound is under pressure from concerns over rising borrowing costs and growing anxiety over Britain’s finances. It fell 1.8% last week.
Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, said the overall uptrend against the dollar is due to divergences in central bank policy and the threat of tariffs.
“The threat of tariffs appears to be inflationary in the U.S.,” he said, citing the impact it could have on interest rates. “But (it also appears) the tariffs will further destabilize some of our key trading partners, including Europe, Canada and Mexico.”
Following its weakest level since April 2020, the Australian dollar rose 0.13% to 0.615. The New Zealand dollar rose 0.07% to $0.5559, remaining near its lowest level in more than two years.
BEIJING Enters
The yuan bucked the global trend and rose slightly on Monday after Beijing stepped up efforts to defend the weakening currency by relaxing rules allowing more borrowing in foreign markets and issuing verbal warnings.
The dollar fell 0.12% from a rate of 7.3533 per dollar.
On Friday, the People’s Bank of China suspended its purchases of government bonds, briefly raising yields and sparking speculation that it was stepping up its defense of the yuan.
China’s currency has come under renewed pressure, partly because of investor disappointment at the lack of further stimulus from Beijing to support its struggling economy.
The dollar fell 0.03% against the yen at 157.7. The yen’s decline was softened by news that Bank of Japan policymakers may raise their inflation forecast at a policy meeting later this month, a prelude to another interest rate hike.
Currency
offer
prices per hour
13
January
08:11
afternoon GMT
Description RIC Last US Pct YTD Pct High Low
to Close Change offer Offer
Previous
Session
Dollar 109.89 109.67 0.21% 1.29% 110.17 109.
index 59
Euro/Dollar 1.0213 1.0248 -0.34% -1.35% 1.025 USD 1.0
it’s 177
Dollar/Ye 157.71 157.73 -0.01% 0.23% 157.945 156.
No. 915
Euro/Yen 161.07 161.56 -0.3% -1.32% 161.79 160.
04
Dollar/Sw 0.9186 0.9164 0.29% 1.28% 0.9202 0.91
it’s 56
Sterling sterling/ 1.2171 1.2196 -0.21% -2.69% $1.2236 $1.2
Dollar 1
Dollar/Katwa 1.4409 1.4416 -0.05% 0.2% 1.4447 1.43
nadian 92
Australian/Up to 0.6157 0.6147 0.13% -0.53% 0.6163 USD 0.6
131
Euro/Swiss 0.9379 0.9386 -0.07% -0.15% 0.9395 0.93
38
Euro/Christmas 0.8388 0.8389 -0.01% 1.39% 0.8424 0.83
ling 86
New Zealand 0.556 0.5555 0.11% -0.62% $0.5572 0.55
Dollar/Up to 44
ll
Dollar/No 11.4618 11.4609 0.01% 0.85% 11.529 11.4
road 411
Euro/Norway 11.7069 11.7489 -0.36% -0.53% 11.745 11.7
it’s 045
Dollar/Sw 11.2856 11.2059 0.71% 2.44% 11.3207 11.2
Eden 109
Euro/Sweden 11.5266 11.4863 0.35% 0.52% 11.5291 11.4
in 856
