The dollar was steady against a basket of the other major currencies on Monday as Friday’s mixed U.S. jobs report still supported the case for rate hikes this year, while the pound was sharply lower as fears over a ‘hard Brexit’ weighed.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was trading at 102.25.
The Labor Department said Friday the U.S. economy added 156,000 jobs in December, falling short of economists forecast for jobs growth of 178,000.
The report also showed that the annual rate of wage growth rose to 2.9% in December from a year earlier, the strongest since 2009.
The employment data indicated that the economy is improving enough for the Federal Reserve to keep pushing up interest rates.
The Fed has indicated that three quarter-percentage-point interest rate increases are on the cards for 2017.
Higher rates boost the dollar by making the currency more attractive to yield-seeking investors.
The dollar pushed higher against the softer yen, with USD/JPY rising 0.2% to 117.26, but trade volumes remained thin with financial markets in Japan closed for a holiday.
The euro inched higher, with EUR/USD easing up 0.09% to 1.0542.
The pound was sharply lower against the dollar and the euro, with GBP/USD shedding 0.8% to trade at 1.2183, the lowest level since October 31.
EUR/GBP advanced 0.9% to 0.8652, the most since December 30.
The selloff in sterling came as comments by British Prime Minister Theresa May on Sunday were seen as an indication that the UK won’t try to negotiate continued full access to the European single market when it leaves the European Union.
Source - www.investing.com