USD Rallies

10 April, 2017

Last Friday US non-farm payrolls for March rose by only 98K, which was far below expectations of 180K, marking the lowest growth since May 2016. In addition, the previous figure was revised downwardly from 235K to 219K. The average hourly earnings also underperformed, falling by 0.1% to 2.7% in March, from 2.8% in February.

However, the unemployment rate for March fell to 4.5%, better than expectations of 4.7%, marking the lowest level since July 2007. Initially, the dollar index fell from 100.70 to 100.39 due to the underperforming non-farm payrolls. Dramatically, it was followed by a sharp reversal, lifted by the outperforming unemployment rate, hitting a 3-and-a-half-week high of 101.17.

The strengthening of USD weighed on gold prices. Spot gold fell by nearly 200 points last Friday, from a 5-month high of 1270.51. This morning, the dollar index hit the highest level of 101.24 since March 15.

Fed Chair Yellen will make a speech at 21:10 BST this evening at the University of Michigan. Be aware that her comments may give further clues about a rate hike in June and the shrinking of the Fed’s balance sheet. Per the CME’s FedWatch tool the latest probability of a rate hike in June has increased to 67.2%.

GBP/USD fell to a 2-and-a-half week low of 1.2358 last Friday because of the soft UK manufacturing data (Feb), BoE President Carney’s comment and the strengthening of USD. Carney stated that “the Brexit negotiation would influence bank regulations and cooperation. The transition period poses a risk to the stability of financial system. The global financial system is at a “fork in the road” going into the Brexit talks”.

Tuesday April 11, at 09:30 BST, will see the release of a series of UK inflation data for March, including CPI, core CPI, PPI and core PPI. It will likely cause volatility for GBP and GBP crosses.

Trump has condemned China for the theft of millions of US manufacturing jobs resulting in the shutdown of numerous US factories. The Trump-Xi meeting ended last Friday symbolising the start of a new bilateral relationship. The result was in line with Xi’s goal of cooperation for mutual benefits.

China will likely make a large amount of investment in the US which will create around 700,000 jobs, placing more orders to purchase Boeing airplanes, and opening of automotive, agriculture and consumer markets to US companies.


Source link  
Dollar is waiting for what Powell says

The U.S. dollar has returned to growth on the comments from the Fed officials about the need of further rates increases this year and next one. At the end...

Toxic lira can push euro to $1.04

The collapse of the Turkish lira spreads its toxic influence on the European and EM financial markets. Asian bourses have been losing more than 1% at Monday...

Dollar consolidates expecting rally

Financial markets rise on positive sentiments about earnings and China's fiscal stimulus. That pushed down the demand for USD, but more likely it is just...


USD defense will be short-lived

The dollar index reached the one-year highs on Wednesday due to the demand for safe assets. USDX reached level 95.43 on Thursday, breaking the peak levels...

FOMC expect to reach neutral policy

The FOMC minutes highlighted some increased risks to the US economy particularly concerning trade relationships but the view still holds that the Fed should...

US FOMC expected to raise rates again

UK Consumer Price Index (YoY) (May) is expected out at 2.5% against 2.4% previously. Producer Price Index – Input (YoY) (May) is expected...


PMI expected to weaken further

UK Construction PMI (May) will be out with an expected headline number of 49.7 from a prior number of 52.5. The consensus is for a drop in the numbers...

BOE Expected to Keep Rates at 0.5%

UK Industrial Production (YoY) (Mar) is expected to be 3.1% against a previous 2.2%. Industrial Production (MoM) (Feb) is expected to be 0.2% against...

Consumer Price Index Takes Centre Stage

UK Budget Report will be released. This is a mini-budget and outlines the government’s updated budget for the fiscal year, including infrastructure...

  


Share: