The dollar steadied against major currencies on Monday as traders waited for more data on the U.S. economy, after a disappointing jobs report last week ended a rally in the greenback.
The euro was little changed against the dollar, after data showed German industry avoided a contraction in December. Despite coronavirus lockdowns at home and abroad, demand from China helped export-oriented manufacturers in Europe’s largest economy weather the COVID-19 pandemic.
Speculators have been reducing short positions in the dollar, but some analysts say better U.S. economic data and continued progress in fighting the COVID-19 pandemic will be needed for further dollar gains.
“Although much of the optimism towards U.S. macro is probably well founded, it is less apparent this will come to the data …,” said Kristoffer Kjaer Lomholt, chief analyst, FX and rates strategy at Danske Bank.
“Indeed, the U.S. jobs recovery has more or less stalled, and that did leave some space to take EUR/USD higher. The next big theme that may be priced further in to spot is moving ahead with U.S. fiscal talks.”
Against the euro, the dollar traded 0.1% higher at $1.2032 after a 0.7% slump on Friday. Due today is Sentix’s euro zone investor sentiment index for February due at 0930 GMT.
In a note to clients, J.P. Morgan strategists said they “have growing confidence of underperformance of EUR vs USD.”
“That warrants two changes to the portfolio: 1) rotating away from USD to fund trades primarily out of EUR, and 2) selling EUR/USD outright in spot.”
The British pound bought $1.3715, 0.15% lower to the dollar.
The dollar was quoted at 105.57 yen, having pulled back from a three-month high reached on Friday.
The U.S. economy created fewer jobs than expected in January and job losses the previous month were greater than initially reported, data at the end of last week showed.
U.S. consumer prices and consumer sentiment reports later this week will help determine whether a recent rise in inflation expectations and Treasury yields was justified.
Any disappointing numbers from either report could knock the dollar lower, some analysts said. Investors are also closely monitoring a U.S. debate on additional fiscal stimulus.
President Joe Biden and his Democrats are pushing ahead with $1.9 trillion COVID-19 relief package. House of Representatives Speaker Nancy Pelosi has predicted the final relief legislation could pass Congress before March 15.
The dollar index against a basket of six major currencies stood at 91.130, after falling 0.6% on Friday.
Speculators’ net bearish bets on the dollar fell to $29.95 billion for the week ended Feb. 2, compared with a net short position of $33.81 billion for the previous week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data.
In the cryptocurrency market, ethereum spot prices rose 1.6% to $1,642 after the listing of ethereum futures on the Chicago Mercantile Exchange on Sunday.
Bitcoin, the world’s biggest cryptocurrency by market capitalisation, rose 1% to $39,244.
The onshore yuan edged up to 6.4569 per dollar, but trade is likely to be subdued before the week-long Chinese New Year holidays beginning Thursday.
Elsewhere, the Australian dollar was off 0.15% at $0.7665. Across the Tasman Sea, the New Zealand dollar traded flat at $0.7192.
Reporting by Ritvik Carvalho; additional reporting by Stanley White in Tokyo; editing by Larry King