Tom Westbrook

SINGAPORE, (Reuters) – The dollar gained support on Monday following renewed worries about China’s property market and looming U.S. labor data. Investors are now in a cautious mood.

Markets predicted that U.S. interest rate could rise in the wake of a record 14-month euro high and a 19 month high for the yen.

Hong Kong halted shares in China Evergrande, an embattled developer. This rekindled market nerves over the potential for global contagion or distress in China’s property sector.

Euro fell below $1.16, and is now at $1.1595. This level is close to last week’s low at $1.1563. The yen gained a little bit to 110.99 a dollar. Sterling and the all fell 0.3%.

Evergrande collapse may cause damage to an already fragile Chinese economic system and slow global growth, investors are worried. It rose 0.1%, to 94.049. The Australian dollar fell 0.2% at $0.7257 while the Kiwi was 0.1% lower at $0.6932. [AUD/]

Moh Siong SIM, currency analyst at Bank of Singapore said, “There is” a certain amount of nervousness. However, most traders think Evergrande can be contained.

He said that “it’s part the wall of concern” which could cause the market to “climb”, but is currently keeping investors sentiment rather dour.

Evergrande and a CNBC report on Friday that U.S. trade representative Katherine Tai said Monday that China was not following U.S. China Trade Rules also supported the dollar.

Chinese markets were closed during the holiday.

On Tuesday, the Reserve Bank of Australia is scheduled to meet and will likely maintain policy stability. A 25-basis point increase by the Reserve Bank of New Zealand (on Wednesday) is expected to be priced in across the Tasman.

On Friday, U.S. labor data will show continued improvements in the market. There are 460,000 new jobs expected in September, enough to maintain the Federal Reserve’s course of tapering by year’s end.

Chris Weston (Pepperstone’s head for research) said, “The issue is whether or not there is a number to alter the Fed’s views on tapering its bonds purchases in November” 

The dollar could be on sale this week if U.S. Treasurys find additional buyers in Friday’s U.S. Non-farm Payrolls.”

Reuters polled economists in other countries and found that they expect Australia’s cash rate to remain unchanged until 2024 as per the RBA.

The probability of New Zealand experiencing a rate increase on Wednesday is 97%, while the chance for another rise in November is 96%.

Sterling is suffering losses from Friday’s sharp drawdown. Traders ignored the hawkish rhetoric of central banks to concentrate on a negative outlook and the possibility of higher rates and increased inflation.

Jane Foley, a Rabobank strategist said that investors are now judging the UK based on its entire suite of fundamentals factors. The sterling movements suggest that people aren’t liking what they see. This is as early 2021 losses have been erased.

“The UK has lost its advantage in vaccines… and while PM Boris Johnson loves to call Brexit ‘done,’ many commentators, businesses, and others are just beginning to assess the impact of it.”

The last time Sterling bought $1.1353

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Price of currency at 0222 GMT

Description: RIC U.S. Last Close Pct. Change YTD High Bid Low

Previous changes

Session

Euro/Dollar

$1.1597 1.1594 +0.03%.-5.07%.+1.1614.+1.1590

Dollar/Yen

11.0400 111.0300 +0.01% +7.48% 111.0450 +110.9300

Euro/Yen

128.75 128.75 +128.8600 +1.44%

Dollar/Swiss

0.9304 0.9307 = 0.05% +5.14% –0.9307 +0.9293

Sterling/Dollar

1.3534 1.3543 1.3543 0.05% 0.92% +1.3577.

Dollar/Canadian

1.2642 1.2643 0.0.02% 0.73% +1.2654

Aussie/Dollar

0.7257 0.7268 0.514% -5.65% +0.7283 +10.7250

NZ

Dollar/Dollar 0.6932 0.6943 -0.14% -3.45% +0.6952 +0.6927

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