Monday, 12 March 2018

Dollar Weekly Overview 12 MAR - 16 MAR

Posted by FortFS at 09:41 Labels: ,

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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