It will be interesting to see how long this very short term trend lasts following the release of the data. Often the initial move is reversed and even though the figures are not dollar positive, the trend of dollar strength that has emerged recently could remain.
The labour market in the US is improving as can be seen on a weekly basis, as well as the monthly nonfarm payrolls. Despite today’s hiccup in average earnings, Thursday’s employment cost index was higher than expected, setting off a few alarm bells at the Fed and this will all translate into a stronger US economy.
This week concludes with investors becoming more fractious, not only due to rising geopolitical tensions, but because of the realisation that interest rates are likely to rise sooner than many had previously thought. Both equity and FX volatility has spiked dramatically in the past few days and equity markets in particular have been hit hard. The dollar strength that established itself in July has continued into August, for sterling and the euro, their dizzy highs against the dollar only a few weeks ago seem a long way off now. GBPUSD in particular looks like it’s fallen off a cliff since mid-July.
A next key calendar to have in mind is the next FOMC meeting on 16/17 September where the Federal Reserve’s Janet Yellen will also hold a press conference. The markets will want to see if the language has become any more hawkish, especially after this Wednesday when Charles Plosser became the first to distance himself from the rest of the Committee by voting against the policy action, as his more hawkish stance called for an amendment to the guidance that says interest rates will remain low “for a considerable time after the asset purchase program ends”.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD continues its downward trend for the fourth consecutive day, driven by a stronger US Dollar influenced by the hawkish market sentiment surrounding the Federal Reserve and expectations of prolonged higher interest rates.
GBP/USD: The first downside target is seen at the 1.2600–1.2605 zone
GBP/USD trades on a weaker note around 1.2620 during the early European session on Friday. The decline of Pound Sterling is backed by the growing speculation that the Bank of England will begin the rate-cut cycle this year.
Gold ends Q1 2024 at record highs, what’s next?
Gold is sitting at an all-time high of $2,236, lacking a trading impetus amid holiday-thinned conditions on Good Friday. Most major world markets, including the United States are closed in observance of Holy Friday, leaving volatility around Gold price highly subdued.
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple price has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days.
US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount
The core Personal Consumption Expenditures Price Index is set to rise 0.3% MoM and 2.8% YoY in February. The revised Summary of Projections showed that policymakers upwardly revised end-2024 core PCE forecast to 2.6% from 2.4%.