The dollar languished near a seven-month low on Monday after U.S. jobs growth in May missed expectations while attacks in London that left at least seven people dead and 48 injured just days before Thursday’s national election dented sterling. The geopolitical risks weighed on Asian stocks, which pulled back on Monday despite a rise by U.S. stocks to record highs on Friday. The dollar index, which tracks the greenback against a basket of six major peers, hit its lowest level since the November election on Monday. It was last trading flat at 96.716, failing to erase any of Friday’s 0.5 percent loss. U.S. nonfarm payrolls increased 138,000 in May, missing the 185,000 forecast, suggesting the labour market was losing momentum despite the unemployment rate falling to a 16-year low of 4.3 percent. Also, the number of jobs created in March and April was reduced by 66,000 from what was previously reported.
The dollar was steady at 110.42 yen, after losing 0.8 percent on Friday. The U.S. 10-year Treasury yield was at 2.1574 on Monday, having plunged from Thursday’s close of 2.217 before the jobs data was released. “The reaction in the ten-year yield implies that the market sees a third rate hike in 2017 as diminishing although still a very real possibility,” James Woods, global investment analyst at Rivkin Securities in Sydney, wrote in a note. After attackers rammed a van into pedestrians on London Bridge and stabbed revellers in nearby bars on Saturday in the third terrorist attack in Britain in the last three months, Prime Minister Theresa May said Thursday’s national election would go ahead .
Police shot dead the three male assailants in the Borough Market area of London Bridge within eight minutes of receiving the first emergency call. They arrested 12 others, and raids are continuing, police said. May is expected to resume campaigning on Monday for a vote which polls show is much tighter than previously predicted. A close election could throw Britain into political deadlock just days before formal Brexit talks with the European Union are due to begin on June 19. Sterling fell as much as 0.3 percent before paring the losses to trade down 0.2 percent at $1.2871 early on Monday.
“Any extension of the current 12 seat majority will be pound positive,” Rivkin’s Woods wrote. “Any failure to expand on this majority will weaken the PM’s negotiation position.” The euro fell 0.1 percent to $1.12745 on Monday, holding on to most of Friday’s 0.6 percent gain. MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.1 percent in early trade. Japan’s Nikkei retreated 0.1 percent on a stronger yen. Australian shares slid 0.8 percent and South Korea’s KOSPI was off 0.1 percent.
On Friday, all three major Wall Street indexes hit all-time highs, with gains in technology and industrial stocks more than offsetting the subdued jobs report. In commodities, crude prices inched higher but gains remained capped amid concern that U.S. President Donald Trump’s decision to abandon a climate pact could lead to an increase in U.S. oil output. U.S. oil was up 0.1 percent at $47.69 a barrel. Global benchmark Brent> was flat at $49.96. Gold rose to a six-week high on Monday, driven by the weaker dollar. It was trading close to that level at $1,280.91 an ounce.