US Dollar Ends Week Firm on US-China Ceasefire, Nonfarm Payrolls

The US dollar ended the week with gains against the majority of most-traded currencies, though not against the Canadian dollar. The US-China trade ceasefire and positive US employment data were the main contributors to the greenback’s rally.
The week started with positive news that the United States and China agreed not to escalate their trade conflict further and to resume negotiations. The employment report from Automatic Data Processing released on Wednesday missed expectations, leading to concerns that Friday’s nonfarm payrolls will be disappointing as well. But that was not the case as US employers added far more jobs than was expected. That made speculators trim their bets on interest rate cuts from the Federal Reserve this year, though they still expect a cut this month. It is important to note that not all parts of the report were positive as wages grew less than was expected.
In other news, Christine Lagarde, managing director at the IMF, was chosen to replace Mario Draghi as the head of the European Central Bank. Analysts expect her to keep Draghi’s dovish stance and ultra loose monetary policy.
Talking about monetary policy, the Reserve Bank of Australia decided to cut interest rates this week as was largely expected. Surprisingly, the Aussie rallied after the event. Meanwhile, Sweden’s central bank kept rates unchanged, signaling about possibility of a hike at the end of this year or at the beginning of the next.
The Great Britain pound did not fare well this week, in part because all of the PMI figures released over the week were underwhelming.
EUR/USD dropped from 1.1367 to 1.1225 over the week. GBP/USD declined from 1.2694 to 1.2521. USD/CAD ended the week at 1.3075, little changed from the opening level of 1.3081, after touching the weekly high of 1.3144.

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