US dollar retreats as improving risk appetite offsets strong payrolls data

The US dollar weakened on Monday, November 9, surrendering part of Friday's sharp gains as recovering global equity markets reduced demand for defensive assets, although expectations of another Federal Reserve interest rate increase limited the decline.

The greenback remained near recent highs against the euro and Australian dollar after stronger-than-expected US employment figures reinforced expectations that borrowing costs would rise again in December.

Price overview

As of 11:18 GMT, the US Dollar Index declined approximately 0.3% to 101.88 points.

EUR/USD advanced 0.4% to $1.1187, while GBP/USD gained 0.5% to $1.3411.

USD/JPY fell approximately 0.3% as the yen recovered, while AUD/USD rose around 0.5%, as NZD/USD gained approximately 1%.

Risk appetite improves

The dollar's retreat coincided with a recovery in investor sentiment as concerns surrounding artificial intelligence stocks eased and markets reassessed geopolitical risks in the Middle East.

The improvement encouraged renewed demand for risk-sensitive currencies, particularly the Australian and New Zealand dollars.

Strong employment supports Fed tightening

Friday's US employment report showed stronger hiring, lower unemployment and accelerating wage growth, reinforcing expectations of another rate increase.

Markets assigned approximately an 81% probability to a 25-basis-point increase at the Fed's December meeting.

Inflation data in focus

Investors now await Tuesday's US consumer price index report, with monthly inflation expected at 0.3%.

A stronger reading could revive dollar demand by strengthening the case for tighter monetary policy.

Market outlook

The Dollar Index faces resistance near 102.20, followed by 102.50, while support stands around 101.70.

Tuesday's inflation figures could determine whether Monday's retreat develops into a broader correction or proves temporary.