US Dollar clings to last week’s recovery gains

Markets have started the new week in a calm manner and the US Dollar manages to stay resilient against its major rivals after having registered impressive gains on the back of the impressive January jobs report on Friday. The US Dollar Index (DXY) holds at fresh multi-week highs near 103.00 and the benchmark 10-year US Treasury bond yield stays in positive territory at around 3.55%. US stock index futures are down between 0.3% and 0.6% in the European morning, reflecting a cautious market tone. Sentix Investor Confidence Index for February and January Retail Sales will be featured in the European economic docket on Monday. There won’t be any high-tier data releases from the US and market participants will pay close attention to Fedspeak.

The data published by the US Bureau of Labor Statistics revealed on Friday that Nonfarm Payrolls (NFP) in the US rose by 571,000 in January, surpassing the market expectation of 185,000 by a wide margin. Although the annual wage inflation, as measured by the Average Hourly Earnings, declined to 4.4% in January, December’s reading of 4.6% got revised higher to 4.9%. The US Dollar surged higher on the impressive NFP reading and the DXY snapped a three-week losing streak, gaining 1% on a weekly basis.

EUR/USD lost more than 100 pips on Friday and closed below 1.0800. The pair struggles to stage a rebound in the early European session on Monday. The data from Germany revealed that Factory Orders rose by 3.2% in December. Although this print came in better than the market expectation for an increase of 2%, it failed to help the Euro find demand. Retail Sales in the Eurozone are forecast to decline by 2.5% on a monthly basis in January.

GBP/USD fell sharply in the second half of the previous week and touched its lowest level in a month at 1.2033 during the Asian trading hours on Monday. The pair managed to stage a rebound and was last seen trading modestly higher on the day slightly above 1.2050.

USD/JPY opened with a large bullish gap and reached its highest level in nearly a month above 132.50 before retreating below 132.00 in the European morning. Earlier in the day, the Nikkei reported that Japan’s government has approached Bank of Japan Deputy Gov. Masayoshi Amamiya as a possible successor to central bank chief Haruhiko Kuroda. Commenting on the report, “I have not heard anything about nomination of Amamiya as BoJ Governor,” said Japan’s Finance Minister Shunichi Suzuki.

Pressured by surging US Treasury bond yields, Gold price lost more than 4% in the second half of the previous week. XAU/USD tries to stage a recovery early Monday and was last seen trading above $1,875, rising more than 0.5% on a daily basis.

Bitcoin extended its downward correction over the weekend and continued to push lower early Monday. At the time of press, BTC/USD was trading modestly lower on the day at around $22,800. Ethereum snapped a five-day winning streak on Sunday and lost more than 2% on a daily basis. ETH/USD stays relative quiet early Monday and fluctuates in a tight channel above $1,600.

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