Dollar weakens after slower US jobs growth reduces Fed hike expectations

The US dollar steadied near a two-week low on Monday as investors reassessed expectations for further monetary tightening by the Federal Reserve.

Softer labour market data from the United States prompted traders to reduce bets on another interest rate hike this year.

Meanwhile, the Japanese yen remained close to a 40-year low against the US dollar.

The currency's weakness continued to keep market participants focused on the possibility of intervention by Japanese authorities.

Dollar trades near recent lows

In early trading, the euro stood at $1.1435.

The common currency remained close to its strongest level in two weeks.

Sterling also held firm, last trading at $1.3351 against the US dollar.

The dollar index, which tracks the US currency against a basket of six major currencies, was at 100.9 during early trading.

The index remained under pressure after posting its biggest weekly decline since April.

The weaker dollar followed last week's US payrolls report.

The data showed that job growth slowed sharply in June.

The report led investors to reduce expectations that the Federal Reserve would raise interest rates again this year.

The change in market expectations weighed on the US currency.

Investors interpreted the slower pace of job creation as a sign that the labour market may be cooling.

OCBC strategists see the labour market remaining tight

Despite the weaker payrolls report, OCBC strategists said the decline in the US unemployment rate continued to point towards a tight labour market.

According to the strategists, the lower unemployment rate should help keep expectations for further Federal Reserve tightening intact.

Their assessment suggested that markets may still have to consider the possibility of additional policy action from the US central bank despite softer employment growth.

The differing interpretations of the latest labour market data highlighted the uncertainty surrounding the Federal Reserve's next policy move.

Yen stays in focus as intervention concerns persist

The Japanese yen remained one of the most closely watched currencies in the market.

It traded at 161.57 per US dollar.

That was not far from the 1986 low of 162.84 reached last week.

Traders continued to monitor the possibility of intervention by Japanese authorities. Concerns intensified after a sudden surge in buying briefly lifted the yen on Thursday.

Despite the market's focus on possible official action, analysts questioned whether any intervention by Tokyo would provide lasting support to the Japanese currency.

The continued weakness of the yen kept investors cautious as they assessed the likelihood of further volatility in the foreign exchange market.

South Korean won begins historic trading phase

South Korean won strengthened slightly on the first day of its historic 24-hour onshore spot dollar-won trading.

The currency was trading at 1,534 per US dollar.

The development marked the beginning of round-the-clock onshore spot trading for the dollar-won market.

At the same time, broader currency movements continued to be driven by expectations surrounding US monetary policy and developments in Japan.

Overall, currency markets remained focused on central bank expectations and official policy actions.

The US dollar stayed under pressure following weaker employment data, while the Japanese yen continued to trade near multi-decade lows as investors closely watched for any signs of intervention from Tokyo.