Forex - Dollar dips against euro, yen

The dollar dipped against the euro and the yen on Monday after the latest U.S. employment report on Friday indicated that the Federal Reserve could afford to keep rates on hold for longer.

EUR/USD edged up to 1.1852, off the nine year trough of 1.1753 reached last Thursday.

The U.S. economy added 252,000 jobs in December the Labor Department said, more than the 240,000 forecast by economists. The unemployment rate ticked down to a six-and-a-half year low 5.6%.

But average earnings fell by 0.2% last month and were up by only 1.7% from a year earlier.

Weakness in earnings prompted investors to take profits in the dollar, as markets pushed back expectations for the first hike in U.S. interest rates to late-2015.

The euro remained under pressure amid speculation that the European Central Bank will embark on full blown quantitative easing as soon as its next meeting on January 22.

Over the weekend, the governor of the Italy’s central bank warned that the euro zone is at risk of further deflation and said the best way to combat that threat is through purchasing government bonds.

USD/JPY touched lows of 118.10 on Monday before steadying at 118.32, with markets in Japan closed for a holiday.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slid to 92.07, off the 12-year peaks of 92.76 scaled last week.

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Gold climbs to 4-week high as oil rout continues

Investing.com - Gold rose to the highest level in more than four weeks on Monday, as investors sought shelter from steep losses in the oil market and amid speculation the Federal Reserve will keep rates on hold for longer.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery hit a session high of $1,231.20 a troy ounce, the most since December 11, before trading at $1,222.40 during European morning hours, up $6.20, or 0.51%.

Futures were likely to find support at $1,207.00, the low from January 9, and resistance at $1,233.40, the high from December 11.

Oil prices continued to tumble on Monday to trade near the lowest level since spring 2009 after Goldman Sachs slashed its 2015 price forecast, citing rising global supplies.

London-traded Brent prices declined $1.21, or 2.36%, to $50.09 a barrel, while Nymex oil dropped $1.01, or 2.09%, to end at $47.35.

On Friday, gold tacked on $7.60, or 0.63%, to settle at $1,216.10, after the latest U.S. jobs report showed a surprise drop in hourly wages, suggesting that the Federal Reserve could keep rates on hold for longer.

The Labor Department reported that the economy added 252,000 jobs in December, more than the 240,000 forecast by economists. The unemployment rate ticked down to a six-and-a-half year low 5.6%.

But average earnings fell by 0.2% last month and were up by only 1.7% from a year earlier.

Weakness in earnings prompted investors to take profits in the dollar, as markets pushed back expectations for the first hike in U.S. interest rates to late-2015.

Gold lost nearly 2% in 2014 amid indications a strengthening U.S. economic recovery will force the Federal Reserve to start raising interest rates sooner and faster than previously thought.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

Also on the Comex, silver futures for March delivery rallied 15.3 cents, or 0.93%, to trade at $16.57 a troy ounce. 

Elsewhere in metals trading, copper for March delivery dipped 0.4 cents, or 0.15%, to trade at $2.751 a pound.

The US dollar index, which measures the greenback against a basket of six major currencies, hovered near a 12-year peak, boosted by the diverging policy outlook between the Fed and central banks in Europe and Japan.

The euro remained under pressure amid speculation that the European Central Bank will embark on full blown quantitative easing as soon as its next meeting on January 22.

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