The dollar is falling across the entire spectrum of the market, ignoring the strong report on the labor market

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The dollar drops across the entire spectrum of the market, ignoring the strong report on the labor market from ADP, which usually serves as a reference point for traders in forming expectations for Friday’s key release. Employment growth in the private sector again exceeded $ 200 thousand, confirming the excellent condition of the US labor market.
But the change of market sentiment had a significant impact on the behavior of the USD, demand for which has faded along with escape from risk. Another important catalyst for the correction in the dollar index served as a rally of the British pound, which rejoiced in the negotiations for Bracito – it became known that the London and Brussels have agreed to maintain the access to the European market to British companies providing financial services after the country’s withdrawal from the Union. The pound soared above 1.29 utyanuv for a Euro, which has come close to the level of 1.14.
But tomorrow’s report on the labor market may make adjustments to the current balance of power. If the increase in jobs will be about 200 thousand, and wage growth will accelerate, the dollar will have to wait for a surge of demand for the strengthening of expectations for further fed tightening. In other words, the work factor in the expansion of the divergence of the courses of monetary policy, especially against the backdrop of slowing economic activity in the Eurozone.
While positive for the dollar scenario, the Euro will lose points and return to the 2.5-mestnym lows around 1.13. It is also important to monitor the dynamics of interest risk, since the resumption of sales in the stock markets could weaken the position of the single currency in favor of the dollar.
Michael Mashchenko,
Analyst social network for investors
eToro in Russia and the CIS