The dollar needs economic support

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In early trading on Monday, the markets tried to ignore the new signs of an escalation of the trade conflict between the US and China. However, despite the fact that the response of Beijing was to be expected, investors still fled from risky assets, although without a pronounced panic. Import duties on some American goods was increased to 25%, which again made the markets nervous and afraid to start a trade war.
Not survived and the dollar, which initially tried to stay stable. “American” is weakening against European currencies, whereas in pairs with protective yen and the franc has been doing well. The USD bulls hesitate to attack, fearing a new wave of aggression on the part of Washington in response to the actions of China and the continuation of the exchange of trade barriers in the future. At this stage, until, until you see the glimpses of the tension between the two powers, this factor will constrain attempts to strengthen the dollar.
In such circumstances, the U.S. currency is to rely on support from the economy. In this context, the main event of the week for the USD will be Friday’s employment report in the United States. Traditionally, market participants will be more interested in the category of earnings than the rate of job creation that receded into the background as the tightening conditions in the labour market and bringing it closer to full employment.
If wages grow in line with expectations or exceed forecasts, market participants will slightly adjust their expectations of fed tightening this year, despite the fact that the regulator is predicts three rate increase.
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Michael Mashchenko,
Analyst social network for investors
eToro in Russia and the CIS