By Carla Mozee and Saumya Vaishampayan, MarketWatch
NEW YORK (MarketWatch) — The U.S. dollar rose against European rivals Monday but fell to a one-month low against the Japanese yen.
The week’s currency action is likely to be dominated by a deluge of U.S. economic data, including a monetary-policy decision from the Federal Reserve and key U.S. monthly jobs data due later this week.
The euro EURUSD -0.28% traded at $1.3254, down from $1.3274 on Friday. The British pound GBPUSD -0.40% fell to $1.5355 from $1.5381. But the dollar USDJPY +0.02% dropped to a one-month low against the Japanese yen, buying ÂĄ97.87, less than ÂĄ98.25 late Friday in North America. The dollar fell as low as ÂĄ97.61 intraday, according to FactSet data. The stronger yen contributed to a sharp decline in Japanese stocks, which hit their lowest level in more than a month on Monday.
The market’s most anticipated report is slated to arrive Friday from the Labor Department, which is currently expected to show that the U.S. economy created 175,000 jobs in July and that the unemployment rate dipped to 7.5% from 7.6%, according to economists polled by MarketWatch.
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The Fed has said labor-market conditions are a major component in its assessment of whether to slow the pace of stimulus efforts for encouraging economic growth.
“Currency markets have been more active than international equity markets in recent days as traders position for this week’s [Fed] meeting by selling the U.S. dollar,” CMC Markets’ chief market analyst, Ric Spooner, said in a note Sunday.
The ICE dollar index DXY +0.17% , a gauge of the greenback’s movement against six other major currencies, was at 81.752, up from 81.665 late Friday in North America. The index fell 1.1% last week.
The WSJ Dollar Index XX:BUXX +0.16% , an alternative measure of the currency’s moves against a slightly wider basket, rose to 73.89 from 73.85 on Friday.
Dollar weakness has dragged the ICE dollar index down for the past three weeks, partly on speculation that the Fed would be slow to begin tapering its bond-buying program. Monetary stimulus has been considered a drag on the dollar’s value.
Among other data slated for release this week are manufacturing data from China and Japan for July, manufacturing surveys from Australia and the euro zone, and the first look at second-quarter growth in the U.S.
The markets are also due to get updates on monetary policy from the Fed, the European Central Bank and the Bank of England after their respective meetings.
“Fundamental considerations are likely to dominate technical factors in the week ahead,” currency analysts at Brown Brothers Harriman led by Marc Chandler said in a note Sunday.
“Not to put too fine of a point on it, and recognizing the likelihood of a sub-1% (annualized) U.S. GDP, we expect the news stream to be supportive of the dollar,” they said.
Looking at technical factors for the ICE dollar index, BBH said: “A move back above 82.00, and ideally 82.40, would likely confirm a near-term bottom and spur a bottoming of the technical indicators.”
CMC’s Spooner said that, given recent economic data, there appears little risk the Fed will suggest it will be more aggressive on tapering monetary stimulus than what the market currently expects.
“The risk is all the other way, with potential for the Fed to emphasize that it won’t reduce its asset-buying program unless unemployment continues to fall,” Spooner said.
In other currency action, the Australian dollar AUDUSD -0.25% fell to 92.31 U.S. cents from Friday’s level of around 92.28 U.S. cents and the New Zealand dollar NZDUSD -0.19% fell to 80.58 US. cents from 80.87 U.S. cents Friday.
Carla Mozee is a reporter for MarketWatch, based in Los Angeles. Follow her on Twitter @MWMozee.
Saumya Vaishampayan is a MarketWatch reporter based in New York. You can find her on Twitter @saumvaish.
