Friday August 4, 2017 - 16:13:41 GMT
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Where Is The Dollar Headed Next? More Weakness In Store?
John M. Bland, MBA
USD Continues To Head South Vs. EUR The EURUSD has been trading gradually but relentlessly higher since mid-April from the 1.0550 level to a peak just shy of 1.1900. That amounts to a EURUSD gain of nearly 13%. This development will certainly be welcome in the White House as a falling currency improves the terms of trade for the weakening currency and thus is a stimulus for the economy.
A decade or so ago a weaker USD would have been seen as a problem because a falling currency increased the cost of import. For the U.S. this often resulted in an increase in the cost of imported energy. With the U.S. now nearly net energy independent, rising petroleum prices are a stimulus for U.S. energy exports and energy production. It is also a positive for manufacturing industries because it makes domestic products more competitive in the world markets. Furthermore, the Fed is in the process of trying to generate U.S. inflation to get the economy to grow and generate new manufacturing jobs and exports.
July U.S. Employment Data Outperforms The July U.S. Employment Report was mildly better than expected and taken as a positive omen for the economy. Non-Farm Payrolls increased by 209K against expectations for a gain of 180K.The unemployment rate fell to a new low for the cycle of 4.30%, while the Labor Participation rate increased. With the focus of Fed policy on inflation, an increase in Average Hourly Earnings of 0.30% in the month, following 0.20% in June has to be seen as constructive by the central bank. The report is unlikely to change Fed policy, but saw the USD gain on the news and the yield on the 10-yr note rise. Equity markets appeared to be a touch uncomfortable with rising longer term interest rates.
Amazing Trader EVENT RISK Calendar:
Mon 7 Aug
No Major Data
Tue 8 Aug
No Major Data
Wed 9 Aug
12:30 US- Productivity
14:30 US- EIA Crude
Thu 10 Aug
08:30 GB- Output, Trade
12:30 US- Weekly Jobless
12:30 US- PPI
Fri 11 Aug
12:30 US- CPI
Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.
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