The US Dollar (USD) is tracking a little lower on the session in broad, Dollar Index (DXY) terms but losses remain relatively contained and the index is holding a little above last week’s low. The CNY continues to strengthen, meanwhile, giving much of the Asian FX complex a lift. The Chinese authorities are signaling some discomfort with the CNY’s gains, but the country’s rising trade surplus suggests potential for additional strength (and implicitly more pressure on the USD generally), Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD retains a soft undertone

"FX turnover is likely to be relatively light today as the week ahead brings a number of key data reports from the US. The main focus for markets this week will be tomorrow’s NFP report. Private sector data (ADP, Revelio) indicated negative job growth in November. The street is looking for a small (50k) gain in payrolls, however. Weak data will amplify expectations that the Fed has more work to do as it tries to balance its twin mandate and will keep the USD under pressure."

"Seasonal patterns point to the risk of some late year softness in the USD and broader trends continue to highlight downside risks through the turn of the year. Near-term technical pointers remain negative, with chart signals indicating a test of the mid-97 zone is the key risk for the DXY."

"President Trump remarked Friday that he was considering Warsh and Hassett as the replacement for Fed Chair Powell. The president suggested that whoever next leads the Fed should consult him on monetary policy and that he thinks the policy rate should be cut to 1% or lower. The Fed’s Miran and Williams are speaking today."