Dollar steadies as traders wary about U.S. stocks, look to ECB for catalysts

THIS WEEK IN THE FOREX MARKETS

Dollar steadies as traders wary about U.S. stocks, look to ECB for catalysts

TOKYO (Reuters) - The dollar steadied in holiday-thinned trade on Monday after U.S. jobs data showed job growth slowed further in August, while traders shifted their focus to the European Central Bank’s meeting on Thursday.

The U.S. Labour Department report on Friday showed that U.S. employment growth slowed and permanent job losses increased as government funding started running out, raising doubts on the sustainability of the economy’s recovery. Still, the jobless rate fell to 8.4% from 10.2% in July.

In the immediate aftermath, the greenback rallied to its highest in a week at 93.242 against a basket of six major currencies on safe-haven buying, but later retraced its gains as U.S. stock indexes recovered.

“The jobs data which showed a decline in the unemployment rate, and a rise in U.S. Treasury yields, are supporting the dollar today,” said Masafumi Yamamito, chief currency strategist at Mizuho Securities.

“However, what’s weighing on the currency is a huge drop in U.S. stocks (last week).”

The S&P 500 fell 2.3% last week after five consecutive weeks of gains. [.N]

The dollar index =USD was little changed on Monday at 92.895. Foreign exchange trading was likely to be subdued as U.S. financial markets are closed for the Labour Day holiday. Read more...