Gold prices slip as stronger dollar, Fed rate uncertainty weigh
Investing.com - The U.S. dollar edged higher Monday, holding near a three-month high ahead of the release of data to gauge the health of the U.S. economy.
At 04:15 ET (09:15 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher to 99.732, near its strongest level since August.
Dollar looks to private sector data
The dollar has seen demand following the Federal Reserve policy-setting meeting last week, at which the U.S. central bank lowered interest rates by 25 basis points, as widely expected, but raised doubt about the likelihood of another rate cut this year.
Traders have since pared back expectations for a cut in December and are now pricing in a roughly 68% chance of a move.
The ongoing U.S. government shutdown is expected to delay the release of the important nonfarm payrolls report on Friday, as well as jobs opening numbers earlier in the week, and thus investors will have to focus on privately derived economic data for more information.
“Today sees the ISM manufacturing release for November, which contains the employment component,” said analysts at ING, in a note. “It’s not clear if we will see the JOLTS job opening data tomorrow, but on Wednesday, the monthly ADP jobs release will be a big market mover – and probably the biggest chance of the week for the dollar bear trend to restart.”
Euro near three-month low
In Europe, EUR/USD fell 0.2% to 1.1511, with the euro near a three-month low after data showed that Germany’s manufacturing sector showed little sign of recovery in October, while France’s manufacturing sector remained in a state of weakness during the opening month of the fourth quarter.
The European Central Bank kept interest rates unchanged at 2% for the third meeting in a row last week, suggesting that policy was in a "good place" as economic risks recede.
“We do get a heavy slate of European Central Bank speakers,” said ING. “ECB rhetoric looks unlikely to help EUR/USD, however. The debate leans more towards whether eurozone inflation undershoots and the ECB requires another rate cut.”
GBP/USD slipped 0.2% to 1.3123, ahead of the Bank of England’s policy decision this week, where the central bank is expected to stand pat on rates.
The pound was also weighed down by mounting political pressures surrounding British Finance Minister Rachel Reeves, ahead of her budget later in the month.
Aussie dollar awaits RBA decision
In Asia, USD/JPY traded 0.1% higher to 154.20, with the pair remaining close to its highest level since early-February.
The Bank of Japan left rates unchanged as widely expected last week, but Governor Kazuo Ueda raised the possibility of hiking interest rates soon, although this would also depend on Japanese wage growth.
USD/CNY traded marginally higher to 7.1192, after hitting a one-year low last week, with private purchasing managers index data showing that China’s manufacturing sector grew much slower than expected in October.
But the sector remained in expansion territory, contrasting with last week’s government PMI data which showed a contraction.
AUD/USD gained 0.1% to 0.6552, with the focus squarely on the Reserve Bank of Australia’s decision on Tuesday.
The central bank is widely expected to leave rates unchanged and present a hawkish outlook, especially after inflation read hotter than expected in the third quarter.