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Dollar cools as boost from jobs data fades

The euro is closing back above $1.18, the pound is holding $1.30 and the dollar index is slipping back as “dollar nervousness” returns.

As Viraj Patel, FX strategist at ING, puts it:

It will take more than one decent data point in the US to offset near-term headwinds for the dollar, even though there’s been a strong one-way bet against the greenback in recent months.

There is general dollar nervousness right now, related to uncertainty over the US political environment.

As the lift fades from Friday’s US jobs report, which seemed to support current expectations for pace of monetary policy tightening at the Federal Reserve, the dollar index is down 0.2 per cent at 93.393, sending it away from its Friday peak of 93.774, which was a five-session high.

The trade-weighted benchmark has been hit by signals of a gradual tightening path from the Fed, and concern that the White House will struggle to pass tax reform and fiscal stimulus measures. It fell almost 3 per cent in July, its fifth consecutive monthly fall and its longest sustained period of decline since 2011.

Stronger mining stocks are helping the FTSE 100, after a notable rally for Chinese iron ore contracts took prices back up to levels last seen in March.

London’s stock main index, home to a number of major metals producers, is up 0.3 per cent in opening trade, with six of the top 10 biggest rising stocks coming from the mining sector. Glencore and Anglo American are the sector leaders, both up around 1.7 per cent.

Australia’s ASX 200 also benefited from resurgent miners, rising 0.9 per cent and setting the pace for stock indices during Asian trading.

The Euro Stoxx 600 is up 0.2 per cent with the Xetra Dax 30 up 0.2 per cent in Frankfurt.

Tokyo’s Topix index rose 0.6 per cent on a strong performance from industrials. Shares in
Toyota Motor and Mazda Motor were up as much as 2.3 per cent and 2.4 per cent, respectively, after the carmakers announced they would jointly build a $1.6bn plant in the US and co-ordinate work on developing electric and self-driving vehicles, as part of a deeper partnership agreement.

Oil prices are edging lower at the start of the trading week after settling higher on Friday. Brent crude, the global benchmark, is down 0.4 per cent at $52.23 a barrel. West Texas Intermediate, the US marker, fell by the same amount to $49.40.