The foreign exchange market have hastened to fix the profit from the strengthening of the dollar
A notable exception was added in Thursday, restoring some of the losses
The dynamics of the ruble yesterday could cause excitement, but in General fits the General trend. The Russian currency has won back 99.5 cents in the dollar and 90 cents on the Euro, lowering the pair to 63.02 USDRUB and EURRUB up to 75.58 with the main movement after 18 PM.
On Thursday, us stocks managed to reverse the negative attitude formed in the early afternoon. Once again we saw that the market was purchased at the end of the day, although the first half of the S&P500 and Dow Jones 30 fell more than 1.5%. In the end the closure was occurred with a slight decrease of 0.2%.
Dollar profit-taking before important data
Considerable assistance in the recovery of demand for the shares was played by the weakening of the U.S. currency at the end of the day. Today, it is important statistics on the U.S. labor market, which often causes unrest in the markets. Therefore, traders tend to take profits before the publication of betting against the trend. The last two weeks this trend was the strengthening of the dollar, therefore, in the fixing we saw the USD pullback from its recent highs.
To strengthen the weakening of the dollar or even wipe out its recent growth will only unexpectedly weak performance of the US labor market.
As the employment report affect the markets
On average, analysts expected in April, was created about 200 thousand jobs. In favor of the stronger gain – long-term (since the 1960s), the minimum-time claims for unemployment benefits and normal (within the trend) employment growth in the private sector, according to ADP.
However, the employment indexes in the reports on business activity in April reduced compared to March and considerably below the peak values of earlier this year. Respondents report shortages of skilled labor. This should be the reason for the intensification of the struggle for shots, you have to increase wages. But it may take a few months.
Potentially, the employment report may trigger a stronger market reaction than in past times, as investors will be looking for the answer whether there has been a change in the wage growth?
Signs that the answer is “Yes” return speculation, in favor of the fact that the FOMC is forced to respond to this more active level of interest rates. In this case, the dollar is able to continue its rally, as the prospects for fed policy, in contrast to delay initiation of the rate hike cycle in the Eurozone, UK, Japan and many other developed countries. In addition, the strengthening dollar is negative for oil and the ruble and is able to develop their retreat.
If the April salaries will not show significant growth, as employment growth will slow below 200 thousand, that may be the reason for a deeper correction of the American currency, which will detract from its achievements of the last two weeks. As a result, in EURUSD may occur a rebound above 1.20 and the subsequent move towards 1.25 – higher end of the range since the beginning of the year. And the ruble will have a chance to fight back below 64 and potentially again to revert to 60 per dollar.
When selecting from these two options, the first seems much more likely in the short term. Although in the run up to the end of the year is still a high chance that the current growth of the dollar, though, and will continue for the next few weeks, is a short-term rebound after the failure of last year, risking again turn into a sale.