US Dollar Rises Ahead of Employment Data
The US dollar rose against its major trading partners early Tuesday, except for a decline versus the yen, after the long holiday weekend as markets now turn their attention to the August employment data.
With the Federal Reserve now putting more emphasis on weakness in employment, a second straight soft report this Friday would tip expectation toward a larger rate reduction at the Sept. 17-18 meeting.
Quiet period ahead of the Sept. 17-18 Federal Open Market Committee begins on Saturday, so there is the possibility of comments from Fed officials after the report on Friday.
Challenger layoffs, weekly jobless claims, revised productivity and labor costs, and services readings are due for released on Thursday. After the employment report on Friday, the St. Louis Fed is due to release an update to the GDP estimate.
In the forex market, currency volatility picked up today as US markets re-open after the long Labour Day weekend and data releases take over.
The slack in the manufacturing sector has been priced in for a while, and analysts said they probably need to see a rather soft number to trigger recession alarms and drive the dollar materially lower. The consensus is looking at a modest improvement in August, from 46.8 to 47.5.
A quick summary of foreign exchange activity heading into Tuesday showed that USDEUR fell to 1.1035 from 1.1072 at the Monday close and 1.1067 at the same time Monday morning. There are no Eurozone data on Tuesday’s schedule. The next ECB meeting is scheduled for Sept. 12.
GBPUSD fell to 1.3121 from 1.3147 at the Monday close and 1.3136 at the same time Monday morning. There are no UK data on Tuesday’s schedule. The next Bank of England meeting is scheduled for Sept. 19.
USDJPY fell to 145.9138 from 146.8849 at the Monday close and 146.8150 at the same time Monday morning. Overnight, Bank of Japan Governor Kazuo Ueda repeated his previous comments that the BOJ will raise interest rates further if the Japanese economy evolves as expected, according to Bloomberg. There were no Japanese data released on Tuesday.
The next Bank of Japan meeting is scheduled for Sept. 19-20. USDCAD rose to 1.3540 from 1.3493 at the Monday close and 1.3496 at the same time Monday morning. Canadian manufacturing PMI for August is set to be released. The next Bank of Canada meeting is scheduled for Wednesday, when the BOC is expected to lower its target rate to 4.25% from 4.50%. #US Dollar Rises Ahead of Employment Data
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