Demand for the greenback could pick up later in the week
The dollar is steady on Monday, with risk sentiment looking mixed as US stock index futures rebound despite Asian stocks came under pressure earlier in the day as Evergrande approaches the deadline for an $82.5-million payment. Ahead of today’s day-end deadline, the troubled company said it could not guarantee enough funds for coupon repayment
US Treasury yields rise amid hawkish Fed expectations despite mixed US job market data. The report showed on Friday that the economy created just 220,000 jobs in November versus 550,000 expected. However, the unemployment rate dropped from 4.6% to 4.2%, suggesting the country’s labor market keeps tightening further.
As such, EURUSD dipped back below the 1.1300 figure on Monday, staying below the descending 20-DMA since mid-October. As for the data, Germany’s factory orders contracted 6.9% in October versus just -0.5% expected. In the Eurozone, Sentix investor confidence arrived at 13.5 in December versus 18.3 in the previous month, to reach the lowest level since April, while the current conditions index fell for the third month in a row. Downbeat data added to the selling pressure surrounding the common currency. Still, the bearish potential looks limited for the time being as dollar bulls refrain from more aggressive bets at this point.
Later in the week, however, the pair could see deeper losses if demand for the greenback picks up ahead of the key US CPI report due on Friday. Should the figures exceed expectations, Fed rate hike expectations would rise further, thus pushing the dollar north across the market. Global investors will also continue to follow the omicron-related news, as the new variant remains in market focus.