The US dollar remained close to recent highs against several major currencies on Monday, extending the momentum generated by Friday’s employment report. The dollar index, which measures the greenback against six major currencies, steadied at 102.20 after gaining approximately 0.7% in the previous session.

October employment figures showed that job growth accelerated while the unemployment rate declined, strengthening expectations that the Federal Reserve may need to maintain a restrictive monetary policy for longer.

The euro recovered 0.1% to $1.11485 after falling 0.7% on Friday and reaching $1.1132. The Australian dollar gained 0.3% to $0.6875, following a decline of more than 1% that brought it to its lowest level since March 31.

The US dollar eased 0.2% against the Japanese yen to 158.185. Bank of Japan Governor Kazuo Ueda said underlying inflation was expected to remain around the central bank’s 2% target, while acknowledging some upside risks.

Federal Reserve Expectations Shift Toward Another Rate Increase

Market expectations for additional Federal Reserve tightening strengthened following the employment figures and comments from central bank officials. Futures implied approximately 79% probability of a rate increase on December 9, compared with 71% one week earlier.

Expectations had previously weakened during a global technology stock selloff, as investors reassessed artificial intelligence investment prospects, profitability and regulatory risks. However, resilient economic indicators have renewed support for the dollar despite continued uncertainty surrounding the technology sector.

New York Fed President John Williams said US economic growth had remained resilient despite successive shocks, while emphasizing that inflation remained too high and needed to return to the central bank’s 2% target.

St. Louis Fed President Alberto Musalem also identified inflation as a major concern among businesses in his district. San Francisco Fed President Mary Daly indicated that further rate increases could still be necessary despite the recent decline in technology stocks.

The combination of persistent inflation concerns and stronger economic data has reinforced the dollar’s appeal, even as investors continue evaluating the outlook for artificial intelligence-related investment.

New Zealand Dollar Rises as Election Outcome Remains Uncertain

The New Zealand dollar advanced 0.4% to $0.5557 on Monday, recovering from a seven-month low of $0.5529 reached toward the end of the previous week.

Weekend election results weakened the governing National Party’s position, although the final political outcome remains unresolved. Preliminary figures showed that Prime Minister Christopher Luxon’s National Party, ACT New Zealand and New Zealand First had secured 67 seats in a 131-seat parliament, one more than the 66 required for a majority.

However, nearly 400,000 votes, representing approximately 15% of the total, remained uncounted. Official results are expected on November 27. Both Luxon and Labour leader Chris Hipkins have indicated they will wait for the final count before beginning formal coalition negotiations.

Other major currencies also recorded modest movements. Sterling gained 0.1% to $1.3360, while the US dollar eased 0.1% against the Canadian dollar to C$1.4119. The greenback had risen 1.1% against the Canadian currency on Friday after Canadian employment data showed unexpected job losses.

What Investors Should Watch Next

Currency markets will continue assessing whether stronger US economic momentum translates into another Federal Reserve rate increase in December. Upcoming economic indicators and further comments from policymakers may influence expectations for monetary policy and the dollar’s direction.

In New Zealand, the November 27 official election results will determine the country’s governing arrangement and provide greater clarity on the political outlook. Until then, uncertainty surrounding coalition negotiations may remain an important factor for the currency.

The divergence between resilient US economic data, changing interest-rate expectations and political uncertainty in New Zealand remains central to the latest movements across major currency pairs.