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Dollar Near 3-Week-Low On Weak Wage Growth

ForexJul 09, 2018 12:55AM ET
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The dollar traded near its 3-1/2-week lows against its peers on Monday

Investing.com – The dollar traded near its 3-1/2-week lows against its peers on Monday after data last week showed slower-than-expected wage growth.

The U.S. Dollar Index, which tracks the greenback against a basket of six major currencies, fell 0.15% to 93.62.

The data showed average U.S. hourly earnings gained five cents, or 0.2% in June after increasing 0.3% in May.

Meanwhile, nonfarm payrolls rise by a stronger-than-expected 213,000 in June, although its impact on currencies seem to be limited.

"U.S. wages did not increase so substantially, so there won't be a rapid pickup in the pace of long-term interest rate hikes," said Yukio Ishizuki, senior currency strategist at Daiwa Securities in Tokyo.

"If U.S. long-term interest rates don't rise, there is less support for the dollar-yen."

The USD/CNY pair was down 0.31% at 6.6241 as then yuan moved further away from an 11-month low of 6.7344 reached on July 3.

China's foreign exchange reserves unexpectedly rose $1.51 billion in June to $3.112 trillion, central bank data showed on Monday, compared with a drop of $14.23 billion in May and the expectation of a drop of $10.6 billion in June to $3.10 trillion.

Trade dispute between the U.S. and China remained in focus, as the U.S. tariffs on $34 billion worth of Chinese goods came into effect on Friday. Trump told reporters that another $16 billion are expected to go into effect in two weeks, and that he is considering to impose additional tariffs on $500 billion in Chinese goods if Beijing retaliate. 

In response, China followed up by imposing duties on the same value of U.S. products.

The heightened Sino-U.S. trade tensions have sparked concerns of capital outflows from China and was cited as headwind for the Chinese currency.

The yuan fell through a key psychological level of 6.7 on the U.S. dollar on July 3. The Chinese authorities made remarks the same day to assure markets it would keep the currency stable.

Elsewhere, The AUD/USD pair rose 0.4% to $0.7460 , to reach its highest level since mid-June.

Dollar Near 3-Week-Low On Weak Wage Growth
 

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