Asian session review: USD bounces but remains near one-month lows

USD rose slightly against its major rivals in the Asian session on Monday, recovering after Friday’s decline, which was triggered by mixed U.S. August jobs report that cast some doubt on the Fed’s imminent tapering plans.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, rose 0.21% to 92.23.

The U.S. employment situation report for August, which was released on Friday, appeared to be mixed relative to economists’ estimates. The headline reading missed expectations (actual 235,000 vs. economists' consensus estimate of 750,000), while the unemployment rate fell in line with forecasts (to 5.2% from 5.4% in July) and hourly earnings increased 0.6% m/m, twice the expected pace. 

The uncertain August employment report forced investors to push back their expectations for the U.S. Federal Reserve's timetable for tapering. As a result, the U.S. dollar index declined to its lowest level since early August.

Progress on the labour front is crucial for the U.S. central bank. The Fed's Chairman Jerome Powell hinted in August that reaching full employment was a necessary criterion for the regulator to begin paring back its bond purchases.