The US dollar was very strong today despite disappointing employment data. Market analysts suggested various possible reasons for such behavior. Some speculated that the greenback continued to get support from Monday’s positive US manufacturing data. Others argued that it was just a bounce in an oversold market.
Automatic Data Processing reported today that US employers added 428,000 jobs in August after adding 212,000 jobs in July (revised, 167,000 before the revision). While that would a very solid number in usual circumstances, it looked rather poor after the huge losses employment in the United States experienced due to the coronavirus pandemic. Market participants were counting on a much bigger increase of 1,250,000.
Later during the American trading session, there will be released several more reports: factory orders, crude oil inventories, and Beige Book. But traders are more interested in Friday’s nonfarm payrolls. Experts had promised ahead of the report that it will show an increase of 1,385,000. But after the big miss of ADP data market participants are worried that the official report may disappoint as well. The two reports do not always correlate but lately, their readings were a bit closer to each other. Specialists also predicted that the payrolls will show a drop in the unemployment rate from 10.2% to 9.8%. On the negative side, wage growth is expected to stall.
Besides macro releases, the greenback will be also reacting to geopolitical factors, like the US-China trade relations and progress (or lack thereof) in approving a stimulus package that should alleviate the negative impact of the pandemic on the US economy.
EUR/USD dropped from 1.1911 to 1.1835 as of 13:37 GMT today. USD/CHF rose from 0.9093 to 0.9126. USD/JPY gained from 105.96 to 106.28.
If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.
