Dollar Moves Up, But Expects More Losses

The dollar inched higher in early European forex trading on Monday. This followed Friday’s better-than-expected employment report.

However, doubts remain about the U.S. economic recovery. Therefore, gains are likely to be short-lived.

At 3:05 AM ET (0705 GMT), the Dollar Index was up 0.1% at 93.477. USD/JPY was flat at 105.94 while GBP/USD traded up 0.1% at 1.3062. Moreover, EUR/USD was down 0.1% at 1.1772 in the FX market.

Non-farm payrolls increased by 1.763 million in July. It was against the estimated 1.6 million increase, data showed on Friday. The unemployment rate decreased to 10.2% in July, compared to June’s reading of 10.5%.

Analyst James Knightley at ING said in a research note, that this was a better-than-expected result. The risk is this eases the pressure on politicians to agree on an immediate fiscal deal, he said.

Knightley added, with confidence already under pressure, incomes being squeezed by benefit cuts and Covid containment measures hurting job prospects. He said, they are entering a more challenging period for the economy.

The August jobs report is going to be worse. The economic effects of the Covid-19 containment measures increasingly bite.


The Dollar : Executive Orders

U.S. President Donald Trump kept his promise to take executive action. That is if the U.S. Congress failed to reach a consensus over the country’s latest stimulus measures. He signed four executive orders over the weekend related to Covid-19 economic relief.

The orders would provide an extra $400 per week in unemployment payments. That is less than the $600 per week passed earlier in the crisis.

However, doubts remain about the legality of the orders and whether they would achieve the desired impact.

Meanwhile, White House officials and congressional Democrats on Sunday expressed a willingness to compromise on another stimulus package. This seeks to bolster the stalled economy, but said no talks were planned.

Marc Chandler, Chief Market Strategist at Bannockburn Global Forex said, the recent price action lends credence to their view. That a technical consolidative/corrective phase is at hand.

Further near-term dollar recovery looks likely but does not change their longer-term bearish outlook.

A bottom was carved and tested near 92.50, it’s potentially a double bottom. It requires a move above 94.00 needed to confirm it, though others might not be convinced.

Until the 94.50 area (20-day moving average) is surpassed, Chandler added.

Comments Rating 0 (0 reviews)

Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. Subscribe now and receive FREE updates on the market today!

You might also like

Leave a Reply


Subscribe to Our Newsletters

Have the best of Finance Brokerage News delivered directly to your mailbox. Subscribe now to receive the latest market news.