FXTM information and reviews
FXTM
93%
IronFX information and reviews
IronFX
92%
Libertex information and reviews
Libertex
91%
FXCC information and reviews
FXCC
90%
Markets.com information and reviews
Markets.com
89%
FxPro information and reviews
FxPro
88%

Nonfarm payrolls give dollar a black eye


8 February 2021

The US employment report fell short of expectations, feeding the narrative that the recovery in the world’s largest economy is starting to plateau. Nonfarm payrolls clocked in at 49k in January, almost in line with the forecast, but clearly some investors were expecting more as labor market indicators like the ADP and the PMIs suggested an upside surprise was on the cards.

The dollar came under heavy fire. A slowing recovery implies the Fed is likely to keep its foot heavy on the QE accelerator for longer. Fortunately for dollar bulls, euro/dollar ran out of steam near the neckline of a head-and-shoulders pattern that is acting as resistance now, so the technical picture remains favorable.

Of course, bad economic news is sometimes great news for stock markets through the stimulus angle. The S&P 500 notched another record high on Friday, with investors calculating that the Fed will keep its QE program in place for longer and that Congress will make good on its promise for a $1.9 trillion relief package.

The Biden administration appears to have given up trying to negotiate with Republicans about more relief, as time is of the essence. Hence, markets saw this lackluster report as putting more pressure on the Democrats to ram this package through quickly and hopefully not water down its size.

Vaccine mutations and inflation on the radar


Considering the optimism for all the government spending, it is no surprise to see investors overlook the downside risks. Over the weekend, a study suggested that the AstraZeneca vaccine provides only limited protection against the South African strain of the virus.

On the bright side, the report said this was only the case for mild instances of the disease, and that the vaccine may still offer protection in severe cases. Still, this is worth keeping a close eye on. If the vaccines prove ineffective against even a single mutation, the timeline for re-opening the global economy could be pushed back by several months, dealing a major blow to riskier assets.

The other risk on the radar is inflation. Prominent economists have started to argue that the $1.9 trillion package is going to overheat the economy and spark an inflationary outbreak, forcing the Fed to hit the brakes by raising rates. So far, the Fed has been adamant that it won’t react to an inflationary episode, as it would probably be transitory.

However, if inflation tops 3%, the Fed could change its tune quickly. And that is more than possible considering all the federal spending, the accumulated savings and pent-up demand waiting in the wings, soaring energy and commodity prices, and supply chain disruptions. The latest CPI inflation data are due on Wednesday and will be watched closely.

ECB’s Lagarde tops a quiet calendar


As for today, the highlight will be a speech by ECB chief Christine Lagarde at 16:00 GMT. Overall, the focus will remain on the stimulus deliberations in Congress and the pace of vaccinations worldwide, where the UK continues to lead the advanced economies.

Another interesting theme will be whether the US dollar can continue to advance alongside stock markets, like last week. The greenback seems to be losing its safe-haven mojo, slowly becoming more aligned with the solid fundamentals of the US economy.

#source

Related

US Markets lost major support, Asian Indices are melting
US Markets lost major support, Asian Indices are melting

Global markets closed last week on the back foot, and no significant positive factors emerged in Asian trading, increasing the flight to safety. The Hang Seng lost...

20 Sep 2021

US Retail sales and other data has supported Dollar
US Retail sales and other data has supported Dollar

The US Retail sales notably exceeded expectations, adding 0.7% in August vs an expected 0.7% decline. The increase to August last year is an impressive 14.9%...

17 Sep 2021

Geopolitics Fire Up Up and Cryptos Are Booming
Geopolitics Fire Up Up and Cryptos Are Booming

Futures in the United States and Europe are trading lower today as investors are worried about the new security agreement between the U.S., the U.K. and Australia...

16 Sep 2021

UK inflation surges, stocks struggle
UK inflation surges, stocks struggle

European markets flat at the open this morning as UK inflation surged to a record high in August and Chinese economic data was soft. China’s retail sales fell to...

15 Sep 2021

Gold is anxiously waiting for the US inflation data
Gold is anxiously waiting for the US inflation data

Gold, hovering around $1790 since last Thursday, might take an even harder hit. The bears are waiting for a good signal to launch an attack. It is now holding it below significant levels...

14 Sep 2021

Here Is Why Stock Futures Are Trading Lower
Here Is Why Stock Futures Are Trading Lower

Despite a week of doom and gloom in the stock markets, futures in the United States are still trading lower. Since February, the S&P 500 has been on its longest...

13 Sep 2021


Editors' Picks

OctaFX information and reviews
OctaFX
86%
HotForex information and reviews
HotForex
85%
XM information and reviews
XM
80%
FXCM information and reviews
FXCM
79%
Vantage FX information and reviews
Vantage FX
78%
Moneta Markets information and reviews
Moneta Markets
77%

© 2006-2021 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.