A set of US dollar banknotes is fanned out for a photo.
Igor Golovniov | SOPA pictures | LightRocket via Getty Images
As European markets opened on Monday, the dollar rose slightly, rebounding from Friday’s fall in US labor data that was below expectations.
The employment data was seen as a relief for markets as it showed that a surge in employment growth was not strong enough to raise expectations of the US Federal Reserve to tighten monetary policy sooner, hurting the dollar.
There was little risk appetite in the forex markets early on as stocks fell on the US inflation data and Thursday’s European Central Bank meeting amid caution in global markets.
At 0715 GMT, the dollar index rose 0.2% for the day to 90.283. The euro lost 0.2% against the dollar to USD 1.21465.
The Australian dollar, considered a proxy for risk taking, lost 0.2% to 0.7727.
The reluctant rhetoric of ECB politicians suggests the bank is in no hurry to slow down buying under the $ 1.85 trillion ($ 2.24 trillion) Pandemic Emergency Purchase Program (PEPP).
In the meantime, US Federal Reserve policy makers have begun a discussion about withdrawing this aid.
“Lately, a divergence has emerged between the ECB and the Fed, which have indicated their willingness to discuss throttling QE at upcoming meetings,” MUFG currency analyst Lee Hardman wrote in a message to clients.
“It will help dampen the upward momentum for EUR / USD. However, developments are not enough to change our bullish outlook for the pair beyond the near term.”
Speculators have trimmed their net short positions in dollars last week, according to data released on Friday by Reuters and the US Commodity Futures Trading Commission.
China’s yuan hovered around the key 6.40 level, with the offshore yuan changing hands at 0732 GMT at 6.3961.
China’s export growth missed forecast, while imports grew at the fastest pace in 10 years in May, fueled by rising demand for raw materials, data on Monday showed.
“In general, the commercial sector continues its strong performance, suggesting that manufacturing remains the leading role in the post-pandemic recovery,” Commerzbank chief economist Hao Zhou wrote in a press release.
“However, the trade data may have little impact on the forex market as authorities vow to keep the currency stable for the time being.”
Elsewhere, the United States, Britain, and other large, rich nations struck a landmark agreement on Saturday to squeeze more money out of multinationals like Amazon and Google and reduce their incentive to move profits to offshore tax-free havens.
While investors were wary of how technology stocks would react, on currency markets, ING strategists wrote in a note to their clients that plans for a minimum global corporate tax rate of at least 15% would lead to a return of global capital over the longer term, which is positive for the dollar would be.
“Our thoughts here are that eliminating tax havens could impact the hundreds of billions of dollars parked overseas by US multinationals – and reduce the incentive to keep cash overseas,” they said.
In cryptocurrencies, Bitcoin rose 1% to $ 36,166 while Ether rose 2% to $ 2,766. Both traded within the month’s relatively narrow ranges.