The dollar nurses losses as U.S. economic worries weaken the rally

On Monday, the dollar nursed losses against most currencies as poor data on U.S. employment led some investors to scale back bets on a greenback recovery.

The euro held on to gains against the dollar but will face a test later on Monday when data expected to show German industrial output growth slowed at the end of last year.

Speculators have been reducing short dollar positions, but some analysts claim better U.S. economic data needed for more dollar gains and more progress in fighting the coronavirus pandemic.

“The ladder was pulled out from under the dollar by soft non-farm payrolls,”  said Yukio Ishizuki, a foreign exchange strategist at Daiwa Securities.

The dollar traded against the euro at $1.2048 after a 0.7% slump on Friday.

The British pound bought $1.3736, close to an almost three-year high.

The dollar was quoted at 105.38 yen, having pulled back from a three-month high reached on Friday.

Data over the weekend showed the U.S. economy created fewer jobs than expected in January and job losses last month more than initially reported.

The dollar’s index against a basket of six major currencies was at 91.084, down 0.6% from Friday.

In the cryptocurrency market, Ethereum fell 3.88% to $1,615, extending a pullback from all-time highs ahead of the debut of Ethereum futures on the Chicago Mercantile Exchange.

Bitcoin, the most popular cryptocurrency, fell 0.88% to $38,936.

Elsewhere, the Australian dollar held steady at $0.7678. Across the Tasman Sea, the New Zealand dollar edged up to $0.7209.

Damon Harrison
Market Analyst, IPG Group