There is a prospect of higher USD carry than previously assumed – Commerzbank
|US Dollar clings to last week's recovery gains on the back of the impressive January jobs report on Friday. Economists at Commerzbank expect the greenback to remain on a solid foot.
Gleanings from the US labour market report
“Instead of the 200K jobs created expected by analysts it turned out to be approx. 500K, instead of a rise in the unemployment rate to 3.6% we saw a fall to 3.4%. Combined with the recent rise in the number of job vacancies this provides an image of a US labor market that is heavily overheating.”
“So far – let us not delude ourselves – a considerable part of the USD valuation was based on the fact that in the US capital was particularly profitable thanks to a labor force that did not even dream of maternity laws, sick or holiday pay. If this were to change due to a long-term shortage of labor, part of the attractiveness of USD would be lost. However, these are medium- to long-term considerations.”
“For now, the USD bulls are happy about the prospect that the Fed will hardly have to consider the real-economic consequences of a more restrictive monetary policy in view of such a strong labor market. And that means: there is a prospect of higher USD carry than previously assumed.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.