Still nursing a payrolls hangover, the greenback held modestly in the red against most rivals. The dollar hasn’t been quite the same since Friday data showed the coolest pace of US hiring in four months in July which caused investors to ratchet down expectations of when the Federal Reserve might take back some of its aggressive polices that aim to anchor American borrowing rates. The Australian dollar stormed higher and held above three-year lows after the Reserve Bank of Australia, as widely expected, cut its key rate to a new record bottom of 2.50 per cent. The euro and sterling held modest gains against the greenback, supported by the best European factory data in months. Generally weaker world stocks bolstered the yen’s safety prowess, while Canadian traders returned from a long weekend to find the loonie slightly lower.
Sterling
Investor caution on the eve of the Bank of England’s release of a much-anticipated quarterly report on inflation and growth saw the pound react in measured fashion to positive factory data. Evidence of growing momentum in the UK economy helped dial down pressure on central bankers to further ease policy any time soon, helping underlying sterling sentiment.
US dollar
Traders didn’t have much initial reaction to America’s smallest trade deficit in years in June which can bode positively to any revision to US second quarter growth. The monthly trade gap shrank more than 20 in June, the smallest since October 2009, on the back of record exports. The dollar for now is seen getting fewer miles to the upside given dampened expectations of an early tapering in Fed policy following last week’s payrolls miss to the downside.
Japanese yen
General market risk aversion buoyed the safer Japanese currency which held a gain for a third consecutive session against the greenback. Japanese stocks were volatile but managed to finish with a gain, tempering some of the yen’s advance.
Euro
The euro held a slim lead against the greenback with the shared currency firmer on news of the fastest growth in German industrial output in eight months in June, which rose by 3.8 per cent. That easily beat forecasts of a one per cent rise from a revised fall in May. Recent data from the bloc has been consistent with a recession on the decline. Still, any recovery in the eurozone is expected to fly close to the ground, keeping the European Central Bank in easy mode for the foreseeable future, a dovish outlook seen as a general liability for the euro.