The dollar index slipped toward 103.5 on Monday, extending a sharp decline in the previous session as weaker-than-expected US data released last week sparked hopes that the Federal Reserve would slow the pace of its interest rate hikes. US nonfarm payrolls rose by 223,000 jobs in December, posting slightly above expectations but a 0.3% rise in average earnings was smaller than projected and slowed from a 0.4% increase in November.
ISM data also showed that US services sector activity unexpectedly contracted in December at the steepest pace in 2-½ years amid weakening demand. Meanwhile, minutes of the FOMC’s December meeting showed that policymakers committed to pushing rates higher and holding them at a restrictive level until there were clear signs that inflation was easing. The dollar weakened across the board, with the most pronounced selling activity against risk-sensitive currencies such as the Australian and New Zealand dollars.