The Dollar seemed to have run out of steam in July, with the Euro climbing to a two-year high and Sterling trading at nine month highs, but Friday saw investor’s confidence in the Greenback return.
Strong employment data on Friday saw the Dollar gain lost ground against its major counterparties; the Non-Farm Payroll figure came out bullish, as 209k jobs were added in July and June’s figure was revised to show that 231k were added.
This influenced the US Unemployment Rate, which again dropped to its lowest level in 16 months to 4.3%. The releases bolster the Feds case to continue with their tightening programme.
Average Earnings posted the biggest rise in five months up to 0.3% in July and 2.5% on the year. This release supports the Feds case that there may need to be a further rate rise this year. Markets now expect an announcement at the next FOMC meeting in September that the Feds will be starting to trim or reduce their €4 trillion plus of treasury bonds on their balance sheets.
Today has very little to offer in regards to high tier economic data releases. From the UK, we have already seen that the House Price Index has shown an increase of 0.4% on the month, but prices still broadly remain subdued since the start of the year. Later today we have Fed member Neel Kashkari speaking where markets will look for any clues as to what the next move from the Fed will be.
The slow start to the week continues into Tuesday, with only trade balances being looked into in the morning from Germany and France. This is followed by further Labour data from the US, which will reveal the Job Opening positions.
Inflation figures from China will be released in the early hours of the morning with no change expected from the 1.5% seen last time. In the evening, New Zealand will release their Rate Decision followed by the Reserve Bank of New Zealand Press Conference.
A raft of monthly figures hit the wires on Thursday. The UK dominate the proceedings, as UK Manufacturing and Industrial Production gauges are posted. The US release their weekly Unemployment Claims in the afternoon.
A big gauge will be seen at the end of the week again from the US, as the Inflation Figure will hit the wires shortly after lunchtime. Another jump up in Consumer Prices here would no doubt increase the belief of the markets that the Fed is looking to trim their balance sheets, come Septembers meeting.