Investing.com - The U.S. dollar pushed higher against a currency basket on Monday but gains were held in check after data showing a slowdown in U.S. wage growth in January dampened expectations for a faster rate of interest rate hikes this year.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.26% to 99.95.
While Friday’s employment report showed that jobs growth beat expectations, wage growth remained tepid, which will likely prompt the Federal Reserve to adopt a more cautious approach on raising interest rates.
According to Investing.com's Fed Rate Monitor Tool less than 10% of traders expect the Fed to raise interest rates at its next meeting in March. The chance of a June increase is seen at just below 50%.
The Fed, which last hiked rates in December, has forecast three rate hikes this year.
Last week, the Fed stuck to its view that the economy is strengthening, but gave no clear signal on the timing of its next rate hike as officials wait to assess the possible economic impact of the Trump administration’s protectionist policies and recent remarks about currencies.
The greenback has been hard hit by concerns that a preference for a weak dollar could have a prominent role to play in Trump's 'America First' agenda.
The dollar was little changed against the yen, with USD/JPY at 112.62, not far from last Thursday’s lows of 112.04, the weakest since November 30.
The dollar climbed against the euro, with EUR/USD down 0.32% to 1.0747.
In the euro zone, data on Monday showed that German factory growth hit a two-and-a-half year high in January, with factory orders jumping by 5.2%. It was the strongest increase since January 2014.
Against the pound, the dollar was also higher, with GBP/USD down 0.25% at 1.2453.
The Australian dollar slid lower after disappointing domestic retail sales data, with AUD/USD down 0.25% at 0.7661.