# Dollar tentative as investors assess rate-hike path Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-01-09 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: U.S. Dollar Steady on Hope of Fed Rate Hike Slowdown Meta Description: Investors digest data showing U.S. economy slowing, hoping for Fed to be less aggressive. Market cautious on risk assets. Fed meeting next month to focus on URL: https://financedigest.com/dollar-tentative-as-investors-assess-rate-hike-pathhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-01-09t020344z1lynxmpej0801frtroptp4vc-funding-startups-1736814609471-compressed.jpg) SINGAPORE (Reuters) – The U.S. dollar was steady on Monday as investors digested a clutch of economic data released last week that stoked hopes of the Federal Reserve slowing the pace of its interest rate hikes. Data on Friday showed U.S. nonfarm payrolls rose by 223,000 jobs in December, while a 0.3% [rise in average](https://www.financedigest.com/average-annual-uk-food-bill-set-to-rise-454-pounds-as-inflation-soars.html "Average annual UK food bill set to rise 454 pounds as inflation soars") earnings was smaller than expected and less than the previous month’s 0.4%. There were further signs of an [economy slowing](https://www.financedigest.com/thomson-reuters-keeps-outlook-but-wary-of-slowing-economy.html "Thomson Reuters keeps outlook, but wary of slowing economy") down, with the U.S. services industry [activity contracting](https://www.financedigest.com/asias-factory-activity-contracts-despite-chinas-covid-reopening.html "Asia’s factory activity contracts despite China’s COVID reopening") for the first time in more than 2-1/2 years in December amid weakening demand. That led the dollar index, which measures the U.S. [dollar against six major currencies](https://www.financedigest.com/u-s-dollar-advances-vs-major-currencies-as-risk-appetite-fades.html "U.S. dollar advances vs major currencies as risk appetite fades"), 1.15% lower on Friday. On Monday, the index, which gained 8% in 2022, was 0.01% higher at 103.720. Investors have pinned their hopes on the U.S. [central bank](https://www.financedigest.com/dollar-skulks-at-eight-month-low-central-bank-meetings-in-focus.html "Dollar skulks at eight-month low, central bank meetings in focus") toning down its aggressive monetary tightening policy. [Fed fund futures now imply around a 25% chance of a half-point hike](https://www.financedigest.com/stocks-euro-gain-amid-divergent-fed-ecb-rate-hike-outlooks.html "Stocks, euro gain amid divergent Fed, ECB rate hike outlooks") in February, down from around 50% a month ago. Analysts, however, point to the still tight labour [market that is likely to concern Fed](https://www.financedigest.com/markets-start-signalling-fed-may-be-going-too-far-amundi.html "Markets start signalling Fed may be going too far – Amundi") officials. “December’s payrolls report shows the U.S. jobs market [remains too tight to allow the Fed to step down to a 25 bps rate hike next month,”](https://www.financedigest.com/6-months-to-go-until-brexit-and-investor-sentiment-remains-bold.html "6 months to go until Brexit and investor sentiment remains bold") said Mansoor Mohi-uddin, chief economist at Bank of Singapore. We expect the Fed will stay more hawkish than the market anticipates, keeping us [cautious on the near-term outlook](https://www.financedigest.com/recruiter-hays-boosted-by-record-net-fees-but-cautious-on-outlook.html "Recruiter Hays boosted by record net fees, but cautious on outlook") for risk assets. With the next Fed meeting scheduled at the start of next month, [investors will focus on the consumer price](https://www.financedigest.com/oil-prices-steady-as-news-of-saudi-russia-meeting-calms-investors.html "Oil prices steady as news of Saudi, Russia meeting calms investors") index data due on Thursday. Citi said it [expects another “softer” core CPI print with some upside risk but said core inflation](https://www.financedigest.com/dollar-drops-as-inflation-cools-more-than-expected.html "Dollar drops as inflation cools more than expected") could pick up again in early 2023. We continue to [expect the Fed to hike](https://www.financedigest.com/ecbs-makhlouf-expects-50-bps-rate-hike-in-december.html "ECB’s Makhlouf expects 50 bps rate hike in December") by 50 basis points in February as there are still strong underlying inflationary pressures and further loosening in financial conditions would likely not be a desirable outcome. Elsewhere, the Brazilian real had yet to trade after [supporters of far-right former President](https://www.financedigest.com/taiwans-president-looks-forward-to-britain-supporting-its-cptpp-bid.html "Taiwan’s President looks forward to Britain supporting its CPTPP bid") Jair Bolsonaro were arrested after invading the country’s Congress, presidential palace and Supreme Court. The [Japanese yen](https://www.financedigest.com/japanese-yen-gains-as-ueda-set-to-be-named-next-boj-governor.html "Japanese yen gains as Ueda set to be named next BOJ governor") strengthened 0.12% versus the U.S. [currency to 131.94 per dollar](https://www.financedigest.com/worst-not-over-for-em-currencies-as-u-s-dollar-thunders-on-reuters-poll.html "Worst not over for EM currencies as U.S. dollar thunders on: Reuters poll"), while sterling was last trading at $1.2099, up 0.06% on the day, having gained 1.5% on Friday. The euro was up 0.11% at $1.0656, after closing 1.17% higher on Friday. The [Australian dollar](https://www.financedigest.com/asian-stocks-make-7-month-highs-australian-dollar-gains-on-hot-inflation.html "Asian stocks make 7-month highs, Australian dollar gains on hot inflation") rose 0.17% versus the U.S. currency to $0.689, while the kiwi gained 0.02% to $0.635. ======================================================== Currency bid prices at 0128 GMT Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.0660 $1.0645 +0.14% -0.51% +1.0668 +1.0640 Dollar/Yen 131.8650 132.0700 -0.13% +0.51% +132.2500 +131.7400 Euro/Yen 140.57 140.58 -0.01% +0.19% +140.8000 +140.4600 Dollar/Swiss 0.9275 0.9279 -0.03% +0.32% +0.9279 +0.9264 Sterling/Dollar 1.2104 1.2093 +0.12% +0.11% +1.2128 +1.2092 Dollar/Canadian 1.3432 1.3448 -0.10% -0.85% +1.3444 +1.3420 Aussie/Dollar 0.6891 0.6876 +0.28% +1.14% +0.6907 +0.6875 NZ 0.6348 0.6350 +0.01% +0.01% +0.6372 +0.6337 Dollar/Dollar All spots Tokyo spots [Europe spots](https://www.financedigest.com/spain-still-top-spot-for-brits-retiring-to-europe.html "Spain still top spot for Brits retiring to Europe") Volatilities Tokyo Forex market info from BOJ (Reporting by Ankur Banerjee in Singapore; Editing by Muralikumar Anantharaman) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---