The dollar extended its post-payrolls gains on Monday in a sluggish start to the week with the Lunar New Year holidays and the Super Bowl game all but guaranteeing a tepid session in Asia.
The dollar index ticked up 0.1 per cent to 97.144, after having climbed 0.6 per cent on Friday thanks to an upbeat non-farm payrolls report.
While the headline employment gain of 151,000 undershot expectations, details were encouraging, including a 0.5 per cent jump in average hourly earnings - the biggest gain in a year. The jobless rate dipped to an 8-year low of 4.9 per cent.
“This provides further evidence of the nascent improvement in wages growth, with some solid increases coming through in the past six months,’’ analysts at ANZ wrote in a note to clients.
“The evidence is increasingly pointing towards a more resilient consumer, with falling unemployment and rising wages. A continuation of these themes would likely help quell fears over US growth prospects.’’
The euro traded at $1.1131, having retreated from a three-month peak of $1.1250 touched on Friday.
Against the yen, the greenback rebounded 0.5 per cent to 117.38, from Friday’s 2-1/2 week trough of 116.285.
The dollar still nursed a 3.6-percent slide on the yen last week, marking its biggest weekly drop since July 2009. It had been under broad pressure as the market moved to price out the risk of a hike in US interest rates this year.
“What we are seeing today is a correction after overwhelming selling in the dollar we saw last week. It is just unwinding of positions, not fresh bets against the yen,’’ said Koichi Takamatsu, executive director of forex trading at Nomura Securities.
Worries about slowing global growth combined with a loss in US economic momentum in the fourth quarter have convinced many investors that the next hike by the Federal Reserve will be a long time coming.
The upbeat jobs data might have breathed some life back into those Fed hike expectations, but markets will need a lot more convincing, traders said.
The pricing of US interest rates futures are in fact indicating traders see a less than 50 per cent chance of a rate hike by the end of year, with a rate hike in March almost completely priced out.
Commodity currencies also came back to life after taking a beating on Friday.
The Australian dollar rose 0.5 per cent to $0.7093 after having fallen to as low as $0.7060 on Friday.
There is no major economic data out of Asia on Monday. Most centres in the region will be shut on Monday and Tuesday for the Chinese New Year holidays. China will be closed all week.