USD surprisingly unmoved by Japan and EU trade deal news

Matthew Ryan, CFA Ebury

Macroeconomic news out of the US remains remarkably resilient, as business owners and consumers appear almost completely unaffected by the lingering trade uncertainty.

Thursday’s S&P PMI figures were once again solid, with the composite index jumping to a firmly expansionary 54.6 - its highest level since December. We’re also not seeing any signs of mass layoffs, at least according to the timely jobless claims figures, which slumped to just 217k last week - the sixth straight weekly drop and the lowest level since April.

While yesterday’s solid data provided a bit of support for the greenback, the dollar is trading more on tariff news than macro figures at present.

We are somewhat surprised that the dollar has not posted larger gains given that the US-Japan trade deal is now done, and an agreement with the EU appears very close - the S&P 500 hit fresh all-time highs on the news, so its perhaps a surprise to see the USD not follow suit.

Today’s durable goods order data is unlikely to rock the boat, so investors will have one eye on next week’s Fed meeting.

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

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