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Asian Session – US dollar contains losses in holiday-thinned trade

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The US dollar was struggling to regain its composure following the weaker-than-expected employment report on Friday. The dollar was trading around the 1.10 mark against the euro, whereas against the yen, the 119 handle was proving to be the focal point. Overall the dollar did not extend its losses following Friday’s disappointment, as many traders felt the currency’s long-term prospects and monetary policy divergence in favor of the US still offered advantages to the greenback compared to other majors.

Non-farm payrolls badly missed expectations by coming in at 126,000 against economists’ expectations of 246,000 and a downwardly revised 264,000 number the previous month. This was the lowest increase in jobs since January of 2014. The weak numbers were interpreted by many as to mean that a Fed rate hike could be delayed and that interest rates would be hiked only once this year. However, unemployment did manage to hold at 5.5% and average hourly earnings rose by 0.3% month-on-month compared to expectations of a 0.2% increase.

The Australian dollar also managed to rebound above the 76 US cents level at around 0.7640, ahead of tomorrow’s Reserve Bank of Australia meeting during which an interest rate cut to 2.00% is expected from 2.25%.

Looking forward to the remainder of the day, the main action is expected to take place during US trading hours, when the ISM non-manufacturing survey for March will come out. New York Fed President Bill Dudley, who attracts the market’s attention together with Janet Yellen and Stanley Fischer, will also speak on the economic outlook. Major European market centers will be closed due to the Easter Monday holiday.

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