The dollar American weakens on the first day of the week marked by the Labor Day in the US, which reduces trading volumes. Traders are evaluating last week’s mixed labor report and its possible impact on the federated reservel before his next monetary policy meeting the September 19 and 20, 2023.
The index of the dollarwhich tracks its performance against six other major currencies, is down 0.1% slightly to 104.075, near the two-month high reached last week at 104.44.
Dollar: the data that August produced and those that are to come
Friday’s employment report painted a mixed picture: job growth exceeded expectations in August, but the economy created 110,000 fewer jobs than forecast in June and July. The unemployment rate increased to 3.8%, although wages moderated.
Importantly, 736,000 new jobs were created, raising hopes that the additional labor supply could ease wage pressures, even at a time when hiring remains strong. Traders tend to believe that the Federal Reserve will keep its monetary policy unchanged at the end of the month, which has negatively impacted the dollar.
However, this information also suggests that the US economy it is slowing down gradually rather than abruptly, increasing confidence in a soft landing. This could support the dollar in the longer term, as the economies of Europe and Asia face difficulties.
The data released this week is unlikely to drastically change market sentiment. Additionally, traders will be able to hear from various Fed spokespersons in the coming days, including Dallas Fed President Lorie Logan, New York Fed President John WilliamsGovernor Michelle Bowman, Governor Michael Barr and Chicago Fed President Austan Goolsbee.
Dollar vs. Euro
On the other hand, the euro is experiencing an increase of 0.2% against the dollar, reaching 1.0794, thanks to the weakening of the dollar. This comes despite the fact that German exports fell by 0.9% in July due to the decline in global demand.
Statements by the President of the European Central Bank, Christine Lagarde, will be crucial on this day, as clues are expected about the next ECB monetary policy meeting. There is uncertainty about the ECB’s decision, as inflation remains above target, but growth in the Eurozone is weaker than expected a few months ago.
On the yuan front, the USD/CNY pair is up 0.1%, reaching 7.2677, and remains weak on expectations that the next few China data shows fragile economic recovery. The Caixin Services PMI for August is expected to indicate a slight slowdown in the services sector, and trade data on Thursday is anticipated to show a contraction in exports and imports in August compared to a year earlier.
Additionally, GBP/USD is up 0.2% at 1.2614, while USD/JPY is almost unchanged at 146.19, and AUD/USD is up 0.4% at 0, 6473, pending the Reserve Bank of Australia meeting on Tuesday, where interest rates are anticipated to hold at maximum levels in the last decade due to recent signs of cooling inflation and employment.
Source: Ambito
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