Dollar Off to Firm Start as Focus Shifts to Jobs Data

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The dollar held firm on Monday as investor focus shifted to the U.S. labour market, following softerthanexpected inflation data last week that has done little to soothe concerns about the Federal Reserve dialling down its monetary stimulus.

The dollars index against six other major currencies rose 0.1 to 91.870, having recovered from Fridays low of 91.524 hit in the wake of the inflation readings.

The euro fell 0.1 to 1.1923, as it struggled to recover the 1.20 level, while the dollar hovered at 110.67 yen, not far from Wednesdays 15month high of 110.105.

The U.S. personal consumption expenditures PCE price index, excluding the volatile food and energy components, increased 0.5, short of expectations for a 0.6 rise.

Nonetheless the rise in core PCE to 3.4 yearonyear in May was the biggest jump since 1992 and markets remain cautious if the Fed will normalise policy earlier, analysts at Maybank in Singapore said in a note on Monday.

Signs of a tight labour market have also kept many investors fretting over wagedriven price pressures. Among a raft of economic indicators this week, Fridays payroll data is a key focus with economists expecting an increase of 675,000 jobs.

Depending on the outcome of the payrolls data, the market could start pricing in more chances of a rate hike next year, said Yukio Ishizuki, senior currency strategist at Daiwa Securities.

December 2022 Fed funds rates futures are almost fully pricing in a 0.25 percentage point rate hike by the end…

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