Monday, 12 March 2018
Dollar Weekly Overview 12 MAR - 16 MAR
The dollar ended in
red territory across the board on Friday as the latest employment report by the
US Labor Department showed a weaker-than-expected growth in average wages.
The US dollar
index, which gauges the greenback against a basket of six major rivals, closed
the week near 90.06, easing 0.11 percent. For the week, the index was up 0.17
percent.
According to data,
the US economy added 313,000 jobs in February, above economists’ expectations
for a 200,000 build. It was the best reading in one-and-a-half year.
However, attention
also relied on wages growth, which turned out to be below forecast. Average
hourly earnings rose by 0.1 percent in February against an estimated 0.2
percent.
The unemployment
rate unexpectedly remained unchanged at 4.1 percent despite analysts forecasted
a decline to 4.0 percent.
Labor market
conditions and inflationary pressure are two key measures closely monitored by
members of the Federal Open Market Committee in order to define future monetary
changes.
Following the
release of February’s employment data, expectations for four rate hikes this
year notched down, weighing heavily on the greenback.
Federal Reserve
funds tracked by CME Group’s FedWatch tool showed expectations for a 25 basis
points interest rate hike in March are currently at 88.8 percent.
By the time of this
writing, the US dollar index was trading 0.12 percent lower at 89.96.
Last week, the
dollar was also impacted by President Donald Trump’s decision to impose import
tariffs to steel and aluminium. Trump signed on the implementation of tariffs
on Friday.
Canada and Mexico
were exempted from the tariffs, although initially they were meant to pay too.
The European Union and China said there will be countermeasures.
On the other side,
the American currency remained supported by President Trump’s willingness to
meet Kim Jong Un before May. He said “improvements” are being made in order to
achieve a “permanent denuclearization” in North Korea.
South Korea's
National Security Office said the North Korean leader is ready to "refrain
from any further nuclear or missile tests" while negotiations are
underway.
Focus this week
will be at inflation data. The consumer price index is due for release on
Tuesday and the producer price index is scheduled a day later. Those reports
are likely to impact on expectations for further monetary policy adjustments
and therefore, in the dollar too.
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