The dollar weakened on the unexpected rise in unemployment and stagnation of wages in the United States
The main theme of the currency markets around the world today is the weakening of the dollar. It began on Friday immediately after the publication of important macroeconomic data on the labor market, including jobs in non-agricultural sector of the USA, as well as such important related releases as the unemployment rate, hourly earnings, participation rates among the working population, average hours of work Americans, etc.
I must say that the market is surprisingly painfully reacted to the increase in the unemployment rate by 0.2 percentage points to 4.0% compared to the baseline forecast of 3.8% since June is typically a seasonal strong month for the US labor market through the creation of a large number of temporary vacancies in the eve of the national holiday – the independence Day. On closer examination it turned out that most of the jobs lost in the agricultural sector, thus reacted to contrarily introduced in response to the tariffs of the trump China and Europe. This segment is not included in the sample title of the publication, which, at first glance, did not understand the source of such growth of unemployment.
In addition, the bad taste left from watching the lack of progress in hourly wages of Americans. This figure is considered one of the direct precursors of inflation – an extremely important factor that could persuade the fed to correct course for the acceleration of the increase in the key interest rate. Now such a solution seems, at least, controversial. Why the dollar has undergone a correction.
Today, the ruble is trading around 62,80 on the dollar and the Euro of 73.92. Taking this into account, as well as technical support levels, we can expect the strengthening of the domestic currency until the end of the week to 62,10-62,15 rubles per dollar. Accordingly, given a neutral background for the pair Euro/Dollar during the reporting period, the Euro/Ruble can expect levels 73,65-73,69 rubles per Euro.
However, the impression that the currencies do not respond well to internal factors. So, for example, the yuan has stopped weakening on Thursday and Friday last week, despite the “official start” trade wars, which declared Donald trump almost with a ceremonial ribbon cutting. The first stage, as you know, involves the application of reciprocal tariffs on the goods each other in the amount of $34 billion, though trump has threatened that in the near future if China would “dare” to respond to a trade war in the same coin, he will bring the volume of sanctions on Chinese imports to the fabulous figure of $500 billion.
Yet, again, currency markets hardly react to these epoch-making news – but it’s only because of precedent in the recent history, and therefore few people understand what is fraught with such mutual arrangements of the two largest economies in the world.
“International financial center”