The dollar has failed under the weight of weak labor market data in the United States

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The dollar, which has sagged under the weight of weak data on wages in the United States continues to lose strength against its major rivals on Monday. Against this background, the Euro and the pound reached almost one-month highs, and yet have all the chances to strengthen by a further 0.5-1% in the upcoming weeks.
Weaker than anticipated growth in wages in the United States pointed out the lack of need to expedite the process of normalizing monetary policy. It supported the demand for risky assets and simultaneously reduced the attractiveness of the dollar in the context of differential courses of monetary policy of key Central Banks.
Meanwhile, the Euro gets additional support on improving economic performance of the Eurozone and a more confident tone of the ECB. By the way, recently the representative of the European Central Bank’s Benoit coeure said that while trade wars are not a threat to the economic recovery of the region.
In the short term, the Euro will react to the rhetoric Draghi during his speech. If the head of the regulator will show signs of improve the health of the Eurozone economy, the players will perceive his comments as a signal for further growth expectations for rates. Currently, the market lays in the price 77 probability of increasing the cost of lending in September 2019.
In the second half of the week dynamics of the adjustments in the dollar pairs can enter data on American inflation, which, after Friday’s statistics on wages will attract particularly close attention of traders. However, even if consumer prices did not justify forecasts, the integrity of the bullish trend on the dollar is unlikely to be under threat, as risks of trade conflicts, supporting the USD, remain.
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Michael Mashchenko,
Analyst social network for investors
eToro in Russia and the CIS