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Dollar Down Near One-Month Low Ahead of RBA Policy Decision

ForexAug 02, 2021 05:42
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© Reuters.

By Gina Lee

Investing.com – The dollar was down on Monday morning in Asia. The greenback opened a busy week ahead, including the latest U.S. jobs report and a Reserve Bank of Australia. (RBA) policy decision, just above a one-month low.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged down 0.12% to 92.078 by 12:31 AM ET (4:31 AM GMT). The index was almost unchanged from Friday when it dipped as low as 91.775 for the first time since Jun. 28.

The USD/JPY pair held steady at 109.69.

The AUD/USD pair inched down 0.01% to 0.7344. The RBA will hand down its policy decision on Tuesday when it is widely expected to reverse its previous decision to begin asset tapering. A likely contributor to RBA's change of tactic would be extended lockdowns in parts of the country, with Brisbane the latest city to extend its lockdown, originally slated to end on Tuesday, to at least Sunday. Sydney is al currently under a lockdown that will be implemented for at least nine weeks until Aug. 28.

The NZD/USD pair inched down 0.09% to 0.6967.

The USD/CNY pair inched up 0.05% to 6.4644. China’s Caixin manufacturing purchasing managers’ index (PMI), released earlier in the day, was a lower-than-expected 50.3 in July. The manufacturing and non-manufacturing PMIs for the same month, released on Saturday, were 50.4 and 53.3 respectively.

The GBP/USD pair inched up 0.01% to 1.3902 ahead of the Bank of England’s policy decision, due to be handed down on Thursday.

The greenback dropped 0.88% during the previous week, its worst performance since early May 2021. U.S. Federal Chairman Jerome Powell reiterated that interest rate hikes were "a ways away" and the job market still had "some ground to cover” before the central bank could begin asset tapering as he handed down the Fed policy decision during the previous week.

Powell’s sentiments were echoed by Fed Governor Lael Brainard, who on Friday said, "employment has some distance to go."

The Fed policy decision handed down the month before, in June, boosted the dollar to its highest level since April 2021 as investors bet on asset tapering to begin as early as 2021. The latest data from the Commodity Futures Trading Commission and calculations prepared by Reuters pointed to dollar net long positions rising to their highest level since early March 2020 in the week to Jul. 27.

Investors are now turning their attention to the latest U.S. job report, including non-farm payrolls and the unemployment rate, due to be released on Friday.

"The U.S. payrolls will be a marquee event risk," Pepperstone head of research Chris Weston said in a note.

"If we do see the elusive one million jobs created, then calls for a September announcement for tapering the asset-purchases program will ramp up," buoying the dollar, whereas a print of around 703,000 or lower would push the currency lower, the note added.

Dollar Down Near One-Month Low Ahead of RBA Policy Decision
 

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