The dollar’s gains came after a U.S. jobs report showed its biggest gain in six months in September, amid global tension over the Middle East.
He dollar quote this Monday below its highest level in seven weeks, after a rebound caused by the strong US employment data for Friday and the escalation of the conflict in the Middle East.
The dollar’s gains came after a U.S. jobs report that showed its biggest increase in six months in September, a drop in the unemployment rate and solid wage increases, pointing to a resilient economy and forcing markets to reduce the value of the Federal Reserve’s interest rate cuts.
“We don’t see an engine to rebuild the structural dollar short positions in the next two weeks,” said Francesco Pesole of ING. “LMarkets seem to have given up on another 50 basis point cut and the inflation figures should not change that, and even if the situation in the Middle East does not worsen further, the consensus seems to be that a material de-escalation is not likely for now.
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In this framework, the dollar index rose 0.05%, to 102.60 units, after hitting a seven-week high of 102.69 on Friday, with a Weekly advance of more than 2%, the largest in two years. At the beginning of last week it was just above 100.
What factors will influence the value of the dollar in the short term?
“The extent of fiscal stimulus in China, which would primarily help economies outside the United States, will be one of the main factors that will affect the dollar in the short term, along with macroeconomic data that may influence the Fed’s policy path,” said Lefteris Farmakis, currency strategist at Barclays. China is about to announce details of its fiscal plan to boost the economy.
In the Middle East, Israel bombed Hezbollah targets in Lebanon on Sunday and the Gaza Strip, on the eve of the first anniversary of the October 7 attacks that sparked the war. The Israeli Defense Minister also stated that all options were open to retaliate against Iran, his archenemy.
The euro fell 0.06%, to 1.0970 dollars, and the yen fell slightly to 149.10 units per dollar, its lowest since August 16, before reducing losses and trading around 148.60. This drop is added to the collapse greater than the 4% it suffered last week, the largest since the beginning of 2009.
Source: Ambito
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