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Weekly Roundup: US dollar benefits from solid increase in non-farm payrolls

currency-newsWeekly Roundup: US dollar benefits from solid increase in non-farm payrolls
Friday’s better-than-expected non-farm payrolls report helped to shore up the US dollar in spite of a higher unemployment rate.

Investors took encouragement from a surprise uptick in average hourly earnings, suggesting that wage growth within the US economy is picking up once again.

With the labour market showing fresh signs of tightening the case for any imminent Federal Reserve policy action remains muted, reducing the risk of an interest rate cut.

The strength of the ISM non-manufacturing composite index also offered a boost to USD exchange rates, pointing towards greater resilience within the domestic service sector.

Although the consumer price index is not the Fed’s preferred gauge of inflation the US dollar is still likely to move in the wake of Thursday’s data release.

Signs that inflationary pressure within the world’s largest economy are starting to ease may leave USD exchange rates vulnerable to selling pressure.

As long as markets see reason to brace for a potential Fed interest rate cut support for the US dollar could fade, especially if market risk appetite sees a recovery in the days ahead.
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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