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Dollar on weak footing despite higher NFP data! (Monday, November 04, 2019)

The dollar dropped on Friday after data showed a mixed view on the economy, and as optimism that the United States and China will reach a deal to end their trade war reduced safe-haven demand for the greenback. The U.S. currency was unable to hold onto the gains, however, and was further dented after the Institute for Supply Management (ISM) said the manufacturing sector contracted for the third consecutive month in October.

Safe-haven flows into the U.S. currency have also weakened on optimism that the United States and China are close to reaching a deal to end their trade war, which has been blamed for slowing global growth.

Asian shares rose to 14-week highs on Monday as growing optimism over U.S.-China trade talks and upbeat U.S. job data boosted global investors' appetite for riskier assets. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2% in early trade, having earlier touched its highest level since July 29. Australian shares were up 0.2% and Seoul's Kospi added 0.9%.

Markets in Japan were closed for a holiday. The United States and China both said on Friday that they had made progress in talks aimed at defusing their protracted 16-month-long trade war, and U.S. officials said a deal could be signed this month. As much as the U.S.-China trade updates continue to point to a Phase 1 deal looking like a certainty, the contentious issues on whether the U.S. will cancel the planned December tariffs and remove some of the current tariffs in line with China's demands remains an unknown. In comments on Friday, White House economic adviser Larry Kudlow said tariffs set to kick in on Dec. 15, which would cover Chinese imports such as laptops, toys and electronics, would remain on the table, and the decision whether to cancel them would be made by U.S. President Donald Trump.

The Dow Jones Industrial Average rose 1.11%. On Monday, U.S. S&P 500 e-mini stock futures, were up 0.15% at 3,067.8.

U.S. job growth slowed less than expected in October and hiring in the prior two months was stronger than previously estimated, data from the Labor Department showed on Friday. Those numbers followed a private survey of manufacturers in China that showed better-than-expected factory activity in October.

Oil prices, which had surged on hopes for a U.S.-China trade deal, were a shade lower on Monday. Global benchmark Brent crude was off 0.10% at $61.63 per barrel and U.S. West Texas Intermediate crude was 0.11% lower at $56.14.

In the currency market, the dollar was up 0.04% against the yen to 108.21, and the euro was unchanged, buying $1.1165.

The dollar index, which tracks the greenback against a basket of six major rivals, was down by a hair at 97.215.

Gold was slightly lower as investors moved into riskier assets. Spot gold was trading at $1,512.42 per ounce, down 0.07%.