The US dollar has seen broad strength over the last 24 hours from central bank meetings around the world.
Overview
Today’s non-farm payroll print has prompted an additional huge rally for the greenback as data showed the United States added a whopping 517,000 jobs compared with expectations of just 190,000. The prints for the last two months were revised upward as well to include an additional 71,000 jobs.Unemployment also came in lower than market expectations – at 3.4% compared with the 3.6% expected, a 53-year low. Earnings growth stayed in line with expectations, coming in at 0.3%. These data points together are raising expectations for an extension of the Federal Reserve’s tightening cycle, and it’s now less likely the Fed will start an easing cycle later this year.When taken in conjunction with a slew of central bank rate decisions, including one from the Federal Reserve raising key interest rates 25 basis points on Wednesday, the US economy is showing surprising resilience in the face of rising rates.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
Monex USA introduces OPTIONS
With currency exchange rates in a constant state of flux, companies transacting cross-border face the risk of losing substantial sums of money if they fail to hedge their exposure to these shifts. Monex USA now offers a wide range of FX options that could help your business better manage risk. Learn More
EUR ⇓
The Euro dropped nearly a percent this morning on the back of wildly strong payroll data from the US, coupled with lots of dovish language from Christine Lagarde after the European Central Bank raised interest rates 50 basis points yesterday morning.
Though signals from the ECB still point to another 50-point hike at the March meeting, Lagarde attempted to hedge market expectations by all but saying that further hikes will be evaluated on a case-by-case basis. It seems that the ECB may reach the end of its tightening cycle ahead of the Fed after today’s jobs data.
GBP ⇓
The Australian and New Zealand Dollars both fell victim to USD strength this morning as AUD and NZD took losses of nearly 1.5% each. Commodity pricing of both gold and crude oil both retreated through the session yesterday, adding to the pain of the oceanic currencies.
Australian and New Zealand sovereign yields fell as well. Market expectations currently are that the next rate hike from the Royal Bank of Australia will likely be its last, potentially ending its tightening cycle earlier than the United States.
