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U.S. Dollar, Yen Little Changed Despite Middle East Tensions

Investing.com - The U.S. dollar and the Japanese yen were little changed on Monday in Asia, after recording gains earlier in the day on heightened Middle East tensions.


The U.S. dollar index that tracks the greenback against a basket of other currencies was little changed at 96.532 by 11:20 PM ET (03:20 GMT).


The index was under pressure earlier in the day after the Institute for Supply Management reported that the manufacturing sector contracted in December by the most in more than a decade, with order volumes crashing to a near 11-year low and factory employment falling for a fifth straight month.


Looking ahead, this week will bring the first U.S. nonfarm payrolls report of the decade, which is expected to point to a slowdown in jobs growth after November’s bumper gains.


Meanwhile, New York Fed President John Williams said on Sunday that it was important for the U.S. Federal Reserve to stick to its 2% inflation target.


"There's been a process of going through the stages of grief about a low neutral rate," said Williams. "These factors are basically the hand we’ve been dealt for the next five to 10 years."


"If inflation continues to underrun our target levels like it has, this downward trend in inflation expectations will likely continue with inflation expectations falling well below target levels," he said.


The USD/JPY pair was little changed at 108.07. The safe-haven yen traded higher against the dollar earlier in the day amid intensifying Middle East tensions, but gave up its gains later on.


The GBP/USD pair slipped 0.1% to 1.3084. Britain’s parliament will reconvene on Tuesday to debate the divorce deal Prime Minister Boris Johnson has agreed with Brussels.


If an agreement isn't reached by end-2020, the outcome may yet be that Britain leaves the EU without trade arrangements in place.


On the data front, the final reading of December's U.K. services activity due later in the day is expected to show a slight uptick though stay in contraction territory below 50. House price data out on Wednesday could also offer clues on the strength of the property market now that there is a bit more Brexit clarity.


The AUD/USD pair slipped 0.1% to 0.6941.



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