Forex – Dollar flat, sterling higher in holiday-thinned trade

Forex
© Reuters.  Dollar flat, sterling higher in holiday-thinned trade© Reuters. Dollar flat, sterling higher in holiday-thinned trade

Investing.com – The dollar was little changed against a basket of the other major currencies on Monday, holding above last week’s six-and-a-half month lows as markets shrugged off news of North Korea’s latest missile test.

The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, was almost unchanged at 97.30 by 10.21 GMT (06.21 ET), holding above last week’s low of 96.79, its weakest level since November 9.

Trade volumes remained thin with financial markets in the UK and the U.S. closed for holidays.

Investors were looking ahead to Friday’s U.S. employment report, which was expected to show that conditions in the labor market remain solid.

A strong U.S. jobs report would cement expectations for a rate hike by the Federal Reserve at its next meeting in June.

Data on Friday showed that slowed less than initially thought in the first three months of the year. Gross domestic product grew at an annual rate of 1.2% in the three months to March, the Commerce Department said, up from an initial estimate of 0.7%.

It was still the weakest expansion since the first quarter of 2016, but economists think growth is likely to rebound sharply in the current quarter.

The dollar was steady against the safe haven yen, with at 111.33.

The yen showed little reaction after fired what appeared to be a short-range ballistic missile early on Monday.

Investors remained in a cautious mood amid ongoing political concerns surrounding the Trump administration.

President attacked the media and dismissed White House leaks as “fake news” on Sunday, following reports that Jared Kushner, his son-in-law and senior aide, sought to set up secret “back channel” communications with Russia before Trump took office.

The euro was almost unchanged, with last at 1.1183 after setting a six-and-a-half month high of 1.1267 last week.

Recent signs of strength in the euro zone economy along with fading political risk have fueled speculation that the European Central Bank could scale back its massive monetary stimulus program.

ECB President Mario Draghi was due to speak at the European Parliament in Brussels later Monday.

Meanwhile, sterling pushed higher, with adding 0.34% to 1.2843, recovering from the three-week low of 1.2774 hit on Friday.

Sterling weakened after an opinion poll showing that the Labor Party narrowed the gap on the ruling Conservative Party ahead of upcoming elections, adding to political risks surrounding Brexit.

Investors had been confident that British Prime Minister Theresa May would secure a strong win in the election, strengthening her hand in Brexit negotiations and allowing her to ignore lawmakers pushing for a hard Brexit.

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