By Samuel Indyk and Jiaxing Li LONDON, Aug 10 The U.S. dollar steadied at a near two-month low on Monday following Friday’s soft jobs data, as investors awaited this week’s inflation data for more clues on the Federal Reserve’s rate path.
Data on Friday showed the U.S. economy unexpectedly shed jobs in July while job gains for the prior two months were revised sharply lower, cooling expectations for a Fed rate hike next month
The soft labour market data adds extra weight to Wednesday’s CPI report as investors look for clues on the path of Fed policy. “It (the labour market data) was a negative event for the dollar,” said Francesco Pesole, FX strategist at ING. “We think the bias remains negative this week but if we get a hot break on CPI, markets are going to be back to pricing in a rate hike as their baseline.” The futures market scaled back the chance of a September move to around 48% from 67% a week ago. A consensus estimate calls for the core CPI to rise 0.2% month-on-month in July, while the annual rate is seen moderating to 2.5% from 2.6% in June. Producer price data on Thursday and retail sales figures on Friday will further inform the outlook for inflation.
The euro was little changed at $1.1555, hovering near its strongest level since mid-June, while sterling was steady at $1.3501, just below its three-and-a-half-week peak touched on Friday. YEN DROPS The yen weakened 0.6% to a low of 158.89 per dollar, and was heading for its biggest daily drop against the U.S. currency in almost five months. The yen has trimmed some intervention-led gains but is still well off the roughly 164 multi-decade low hit late last month.