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Weekly Roundup: Surprise wage growth slowdown and jobs weakness undermines US dollar

currency-newsWeekly Roundup: Surprise wage growth slowdown and jobs weakness undermines US dollar
In spite of earlier signs of strength in the labour market, December’s US non-farm payrolls report delivered a disappointment, dragging the US dollar lower across the board.

A smaller-than-expected uptick in payrolls encouraged bets that the labour market is struggling to tighten further.

However, investors found greater cause for concern on the back of the average hourly earnings figures, which showed a surprise slowdown in US wage growth.

While this is unlikely to be enough to prompt the Federal Reserve to shift back towards a more dovish policy outlook the mood towards the US dollar still soured in response to the data.

Even so, a solid uptick from the latest US consumer price index data could still help USD exchange rates to recover some of their lost ground.

Although the CPI is not the Fed’s preferred gauge of inflationary pressure any increase here would still point towards a strengthening in domestic price pressures, reducing the case for lower interest rates.

A fresh bout of market risk appetite may weigh on the US dollar, however, as markets await the signing of the phase one US-China trade agreement.
 
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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