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Forex - Dollar Holds Steady Ahead of Retail Sales; Pound Dips on Brexit Jitters

Published 03/11/2019, 04:30 AM
© Reuters.
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Investing.com - The U.S. dollar was little changed in early European hours on Monday, as investors looked ahead to the latest U.S. retail sales report for further hints on the strength of the economy.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, held steady at 97.29 by 4:30AM ET (08:30 GMT). The index rose to 97.66 last Thursday, its best level since Dec. 14 last year.

Against the Japanese yen, the dollar was a tad higher at 111.25, bouncing off the prior session's one-week low of 110.77.

Economic reports will remain in focus in the week ahead, after data on Friday showed that U.S. job growth almost stalled in February, with the world's top economy creating a measly 20,000 jobs, far fewer than expected by analysts.

But traders found some hope in figures showing the U.S. employment rate slipped back below 4% and average hourly earnings accelerated by 0.4%.

The Commerce Department will release data on retail sales for January at 8:30AM ET (12:30 GMT).

Elsewhere, the British pound was down 0.1% to $1.2998 after briefly dipping to a near three-week low of $1.2960 on nervousness over Brexit.

Sterling has come under renewed pressure after British foreign minister Jeremy Hunt said on Sunday Brexit could be reversed if lawmakers reject the government's exit deal.

His remarks followed a warning from two major eurosceptic factions in parliament that Prime Minister Theresa May was likely to face heavy defeat at a parliamentary vote on Tuesday on whether to approve her Brexit plan.

May's government is scrambling - so far unsuccessfully - to secure last-minute changes to an EU exit treaty ahead of the vote, which comes less than three weeks before the U.K. is set to leave the European Union on March 29.

Masafumi Yamamoto, chief currency strategist at Mizuho Securities, said traders are trimming holdings of sterling as rate-hike expectations by the Bank of England are reduced, making the currency increasingly sensitive to near-term events, such as the parliamentary vote.

"These days, the UK inflation data isn't as strong as before," he said. "The rate-hike expectation after the avoidance of the no-deal Brexit is fading away."

Meanwhile, the euro was a shade higher at $1.1245. The single currency had fallen to its weakest level since late June 2017 on Thursday, hurt by dovish signals from the European Central Bank (ECB).

-- Reuters contributed to this report

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