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Weekly Roundup: US dollar falters as underwhelming wage growth boosts Fed rate cut odds

currency-newsWeekly Roundup: US dollar falters as underwhelming wage growth boosts Fed rate cut odds
Friday’s US labour market data lent fresh support to bets that the Federal Reserve will cut interest rates before the end of the year, diminishing the appeal of the US dollar.

Although the headline unemployment rate held steady on the month May only saw a modest increase in non-farm payrolls, suggesting that the labour market is struggling to tighten further.

Focus mainly fell on the latest average hourly earnings figures, however, as wage growth showed signs of faltering in the face of increased business anxiety.

With investors now pricing in a 2019 interest rate cut as a near certainly, with the odds of a second potential cut also rising, USD exchange rates struggled to find much in the way of support.

As long as monetary policy looks set to loosen in response to the ongoing impact of the Trump administration’s belligerent trade policies any US dollar gains could prove limited.

Any softening of the US consumer price index could further increase the likelihood of Fed dovishness, even though the index is not the central bank’s preferred gauge of inflation.

Even so, a rebound in May’s retail sales figure could offer the US dollar a measure of support ahead of the weekend, especially if the wider sense of market risk appetite fades.
 
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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