Previous session overview

The euro rose against the U.S. dollar and the yen Monday in Asian trade, as markets cooled off expectations of U.S. interest-rate hikes on the back of dovish remarks from a top Federal Reserve official, coming on top of poor unemployment data Friday.

The euro extended its rally started Friday after data showed U.S. non-farm payrolls fell by 85,000 last month, compared with a revised 4,000 gain in November. At one point, it hit a three-week high against the dollar at USD1.4533, following comments made in Shanghai by James Bullard, president of Federal Reserve Bank of St. Louis, who reiterated the Fed's long-standing view that rates may remain low "for quite some time" in the U.S.

However, the euro lost some momentum and dropped back below USD1.4500 shortly thereafter; as Bullard later said the U.S. isn't likely to alter its existing policies in response to the weaker-than-expected payrolls data. He added that U.S. jobs will start growing in the first half of the year.

Comments by Federal Reserve Bank of Boston President Eric Rosengren on Friday also reinforced the view that U.S. rates may remain longer to help bolster the economy.

The Pound gained against the USD but was volatile as market largely ignoring the Pound and going with the AUD and CAD to express risk. Weighing heavily was the GBPJPY which suffered greatly with the USDJPY pull back.

The Australian dollar rose in Asia trade Monday and bond futures fell as private sector labor market data fueled heightened expectations about a payrolls report later in the week.

Market expectation

The dollar is on the back foot against the yen, pound and euro on Monday as investors clock in prospects that the Fed will keep a loose policy.

EURUSD traders report Asian sovereign sell interest placed between USD1.4520/40. Rate in Asia did trade to a high of USD1.4534, currently holding around USD1.4500.

Pound seen playing catch up on euro-dollar's overnight rally with traders reporting stops triggered as rate moves above USD1.6120 and begins to pressure reported offers placed between USD1.6135/55 (high at writing USD1.6137, currently USD1.6127). Stops noted on a break of USD1.6160, which if triggered seen opening a move on toward USD1.6190/00.

European stock markets are expected to open higher Monday, after Friday's U.S. labor data reinforced hopes that the U.S. Federal Reserve will keep monetary policy loose, while trade data out of China early Monday lifted sentiment across the Asian region.

Disclaimer: the data made available by Dukascopy (Suisse) SAis for informational purposes only. Publication of this data by Dukascopy (Suisse) SA does not constitute provision of investment advice and Dukascopy (Suisse) SA assumes no responsibility with regard toany information, forecast or recommendation herein contained and assumes no responsibility with regard toany losses resulting from any activities conducted the basis of this data, including any investment decisions.

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