U.S. dollar declines, remains near recent highs as investors await key jobs report

(MENAFN) On Monday, the U.S. dollar experienced a slight decline but remained near its highest level in nearly two weeks, as market participants shifted their focus towards the upcoming U.S. jobs report set to be released later this week. The jobs report, scheduled for Friday, is expected to play a critical role in determining the Federal Reserve's next move, particularly after Fed Chairman Jerome Powell signaled a shift from combating inflation to addressing potential job losses. Analysts are closely watching the report to gauge the magnitude of the Fed's anticipated rate cut, with expectations leaning towards a 25 basis point reduction.

Earlier in the day, the dollar had risen to its peak level since August 20, buoyed by a surge in long-term U.S. Treasury yields to their highest since mid-August. This increase followed data indicating that inflation had not significantly decreased, thereby lowering the likelihood of a more substantial 50 basis point rate cut by the Federal Reserve on September 18. Market expectations are divided, with traders estimating a 67 percent chance of a 25 basis point cut and a 33 percent chance of a 50 basis point cut, compared to the previous week’s slightly higher odds for the latter scenario.

The dollar index, which measures the currency against a basket of six major currencies, fell 0.08 percent to 101.67, retreating from its earlier high of 101.79. Meanwhile, the euro gained 0.2 percent to USD1.1060, marking its lowest level since August 19, while the dollar rose 0.40 percent to 146.74 yen. U.S. Treasury trading was paused on Monday due to a holiday, but the yield on the 10-year note remained at 3.9110 percent, following a 4.4 basis point increase on Friday. 

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