Dollar is on backfoot dented by disappointing jobs figures

The U.S. dollar started the week on the defensive after being dented by a second batch of disappointing jobs figures. Remarkably, traders are concerned whether upcoming inflation data could add pressure on policymakers to taper monetary stimulus.

Notably, the possibility of a slowdown in bond buying is also in focus leading up to a European Central Bank meeting on June 10.

Meanwhile, the euro steadied around $1.2168. This is a recovery from a decline to $1.2104 on Friday before the U.S. dollar slipped broadly.

The risk-sensitive currencies, Australian and New Zealand dollars, spent the Asia session above 77 cents and 72 cents. Meanwhile, the American currency dropped by 0.1% and traded at 109.61 yen.

The Chinese yuan traded around 6.4 per dollar after data showed China’s export growth missed forecasts while imports climbed.

The Fed is keeping rates at near zero and buys $120 billion in bonds every month to suppress financing costs and support economic growth. However, policymakers have started inching toward a discussion about winding that help back.

Friday’s jobs data declined 90,000 jobs short of expectations

Friday’s jobs data, which showed U.S. non-farm payrolls rising by 559,000 in May, declined 90,000 jobs short of expectations. It seemed to allay fears of premature policy tightening and higher rates driving a firmer greenback.

However, nerves are persisting ahead of what is likely to be another hot inflation reading on June 10, and analysts see risks on all sides and the coming weeks as pivotal.

The Commonwealth Bank of Australia’s analysts see the dollar at risk of a decline. According to CBA’s Kim Mundy, inflation could fall short of elevated expectations and pull down the currency.

Short bets against the greenback rose last week as Fed officials insist the recovery has a long way to run and they will not rush to react to short-term data points.

Moreover, the market’s focus is also on tapering ahead of a Bank of Canada meeting on Wednesday and the ECB on Thursday, where changes are unlikely. Still, some analysts see adjustments to the pace of Europe’s bond-buying program.