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Investing.com - The U.S. dollar traded higher in Europe early Monday, and the Chinese yuan slumped to a two-week low as protests against the Chinese government’s mobility restrictions to combat surging COVID cases prompted safe haven flows.

At 02:50 ET (07:50 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, rose 0.1% to 106.055, climbing away from the three-month low of 105.30 hit last week.

China posted another record high COVID-19 infections on Monday, and the extent of the country’s restrictive mobility curbs prompted a series of protests in a number of cities, with large swathes of the population showing their frustration that these restrictions were still in place three years after the original outbreak.

These rare protests raised worries about the viability of China's zero-COVID policy and its impact on the world's second-largest economy, pushing USD/CNY up 0.3% to 7.1963, at a two-week high.

While the U.S. dollar has traded higher Monday, its gains have been held back by growing expectations that the Federal Reserve will hike interest rates by a smaller degree in the coming months.

With this in mind, attention will focus on Friday’s U.S. jobs report for November as traders look for signs that the U.S. economy is struggling under the weight of this year’s aggressive interest rate rises.

It will be the last nonfarm payrolls report before the Fed’s final meeting of the year in December, and economists are expecting the U.S. economy to have added 200,000 new jobs, in what would be the smallest increase since December 2020.

Additionally, Fed Chair Jerome Powell is to discuss the economic outlook on Wednesday, while St. Louis Fed President James Bullard and New York Fed President John Williams are both due to speak later Monday.

EUR/USD fell 0.1% to 1.0383, ahead of a speech by ECB President Christine Lagarde to the European Parliament, later in the session.

Traders will be looking for clues as to whether the European Central Bank will continue with a 75-basis-point rate increase in December, given Eurozone CPI traded above 10% in October, or whether a hike of 50 basis points is more appropriate as the region heads into recession.

GBP/USD fell 0.2% to 1.2073, retreating from the three-month high of 1.2153 seen late last week, while the risk-sensitive AUD/USD slumped 0.9% to 0.6686, with slowing Chinese growth likely to hit demand for Australia’s raw materials.

USD/JPY fell 0.7% to 138.13, with the Japanese yen helped by market expectations of a less hawkish Federal Reserve, while core CPI inflation in Japan’s capital, Tokyo, rose more than expected to a 40-year high in November, data showed on Friday.