Dollar falls after employment data, gold rises

The dollar fell during trading on Monday, as currency markets pulled back from their initial reaction, giving up some gains on the back of strong US employment data released on Friday. At the same time the price of gold rose.
Stronger-than-expected US employment data last week boosted the dollar’s strength against major currencies. Traders saw the data as a sign that the Federal Reserve may raise interest rates further to tackle inflation.
But the gains were reversed in early European trade on Monday, with the dollar index falling to 106.25 at 07:50 GMT, down 0.4 percent from a ten-day high of 106.930 on Friday. Markets await the release of U.S. inflation data on Wednesday for further signs on the performance of the world’s largest economy. Analysts polled by Reuters had expected annual inflation to ease to 8.7 percent in July, down from 9.1 percent previously.
The dollar fell to 134,945 yen against the Japanese currency. Bonds fell again in the euro zone after Friday’s jobs data. Italian bonds defied Moody’s decision to downgrade Italy’s outlook.
The euro was up 0.2 percent at $1.02095. The British pound was up 0.4 percent at $1.2118.
Gold turned higher as the dollar and Treasury yields fell, with the focus on U.S. inflation data this week. Gold was up 0.5 percent at $1,782.36 an ounce (an ounce) at 12:52 GMT at 12:52 GMT, after falling one percent in the previous session. And U.S. gold futures rose 0.4 percent to $1798.40.
As for other precious metals, silver rose 2.1 percent to $20.28 in spot trades and is on track to post its best daily performance in more than a week. Platinum was up 0.6 percent at $938.01, while palladium was up 3.8 percent at $2,206.87.