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© Reuters.
By Peter Nurse
Investing.com – The US dollar weakened during early European trading hours on Monday, as investors reassessed the path of US rate hikes following last week’s jobs report, at time risk appetite benefited from the reopening of China’s borders.
As of 03:05 ET (0805 GMT), the , which tracks the greenback’s performance against six other currencies, was down 0.4% at 103.267, continuing Friday’s more than 1% drop.
Investors are also now taking into account that the US central bank is toning down its aggressive monetary tightening policy, with a 25 basis point increase expected in February, up from a 50 basis point increase in December.
This follows the release of the official monthly US employment report last Friday, which showed a relatively benign increase in non-farm payrolls of 223,000 jobs in December, while earnings Hourly averages grew by 0.3%, less than expected and less than the 0.4% of the previous month.
In addition, activity in the US service sector contracted in December for the first time in more than 2 1/2 years, further evidence of the slowdown in the economy.
Bets against the greenback rose to 30,457 contracts last week, the highest number since August 2021, according to U.S. Commodity Futures Trading Commission data on eight currency pairs compiled by Bloomberg.
This puts the US Consumer Price Index for December on Thursday in the spotlight, as any sign that price pressures will continue to ease would reinforce the sentiment that the Fed is nearing the end of its most aggressive hardening cycle in decades.
Elsewhere, the pair fell 0.9% to 6.7748 as the Chinese yuan hit four-month highs after the country reopened its borders to international travelers over the weekend.
This move marks the country’s biggest pivot away from its strict COVID-19 policy, which has contributed to its sharp decline in economic growth over the past three years.
The rose 0.5% to 1.0692, supported by data for a 0.2% monthly rise in German industrial production in November, an improvement on the revised 0.4% drop seen on last month.
It rose 0.6% to 1.2159, after gaining 1.5% on Friday. The risk-sensitive gained 0.8% to hit 0.6930.
The has yet to open for trading on Monday morning, but the Brazilian real will be in the spotlight later in the day as investors react to news that supporters of far-right former president Jair Bolsonaro stormed buildings. key government over the weekend, echoing the insurrection of January 6, 2021 in the United States.
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