The US Dollar is holding ground as markets prepare for this week’s key events

VaselineSeptember 9, 2024

0 3 minutes read

Here’s what you need to know on Monday, September 9:

The US dollar (USD) remains resilient to its main rivals at the start of the week as investors refrain from taking large positions ahead of this week’s key events, which will include US inflation data and the European Central Bank’s (ECB) monetary policy announcement. Sentix investor confidence for the Eurozone and July’s US consumer credit change will feature in Monday’s economic calendar.

After coming under bearish pressure on Friday from the immediate reaction to the US August employment data, the USD index benefited from risk aversion ahead of the weekend ending the day in positive territory. Wall Street’s main indexes fell sharply, with the Nasdaq Composite losing 2.7% on the day. Early Monday, the index continued to rise toward 101.50, and U.S. stock index futures were up between 0.4 percent and 0.6 percent.

US Dollar PRICE Last 7 days

The table below shows the percentage change of the US dollar (USD) against the main listed currencies over the last 7 days. The US dollar was strongest against the New Zealand dollar.

	USD	EURO	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.09%	0.26%	-1.93%	0.62%	1.55%	1.59%	-0.26%
EURO	0.09%		0.37%	-1.87%	0.68%	1.65%	1.67%	-0.18%
GBP	-0.26%	-0.37%		-2.23%	0.30%	1.26%	1.33%	-0.57%
JPY	1.93%	1.87%	2.23%		2.56%	3.59%	3.73%	1.64%
CAD	-0.62%	-0.68%	-0.30%	-2.56%		0.96%	0.97%	-0.87%
AUD	-1.55%	-1.65%	-1.26%	-3.59%	-0.96%		0.00%	-1.80%
NZD	-1.59%	-1.67%	-1.33%	-3.73%	-0.97%	-0.01%		-1.82%
CHF	0.26%	0.18%	0.57%	-1.64%	0.87%	1.80%	1.82%

The heat map shows the percentage changes of major currencies against each other. The base currency is chosen from the left column, while the quote currency is chosen from the top row. For example, if you choose the US dollar in the left column and move along the horizontal line to the Japanese yen, the percentage change shown in the box will be USD (base)/JPY (quote).

The US Bureau of Labor Statistics reported that nonfarm payrolls rose by 142,000 in August. That reading was below market expectations of 160,000. In addition, July’s increase of 114,000 was revised to 89,000. Other details of the jobs report showed that the unemployment rate fell to 4.2 percent from 43 percent, while annual wage inflation, as measured by the change in average hourly earnings, rose to 3.8 percent from 3, 6%

EUR/USD it rose to a weekly high above 1.1150 in the US session on Friday, but reversed direction to close the day in the red below 1.1100. The pair remains on the back foot in the European morning and falls towards 1.1050.

GBP/USD it is struggling to find a foothold early Monday and is trading a few pips below 1.3100 after ending the previous week virtually unchanged. The UK’s Office for National Statistics will release UK labor market data on Tuesday.

USD/JPY it posted losses for a fourth straight day on Friday and hit a one-month low below 142.00. The pair is making a comeback to start the week and is trading above 143.00. Japan’s ruling Liberal Democratic Party (LDP) official and front-runner in the party’s leadership race, Sanae Takaichi, said on Monday that Japan’s inflation, excluding external factors, is still weak.

Gold it headed south in the late US session on Friday and ended the week slightly below $2,500. XAU/USD continues to decline on Monday and was last seen trading slightly below $2,490.

Employment FAQs

Labor market conditions are a key element in assessing the health of an economy and therefore a key factor in currency valuation. High employment, or low unemployment, has positive implications for consumer spending and economic growth, boosting the value of the local currency. Furthermore, a very tight labor market – a situation where there is a shortage of workers to fill open positions – can also have implications for inflation levels, as low labor supply and high demand lead to higher wages.

The rate at which wages rise in an economy is key for policymakers. High wage growth means households have more money to spend, which usually leads to higher prices of consumer goods. Unlike more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persistent inflation, as wage increases are unlikely to be reversed. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.

The weight each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have labor market mandates beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the sole mandate of the European Central Bank (ECB) is to keep inflation under control. However, and despite whatever mandates they have, labor market conditions are an important factor for policymakers, given their importance as an indicator of the health of the economy and their direct relationship to inflation.

VaselineSeptember 9, 2024

0 3 minutes read

US Dollar PRICE Last 7 days

Employment FAQs

Vaseline

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