The President of the United States, yesterday, once again expressed his dissatisfaction with the fact that the US dollar is so strong (the US dollar index was recently at the 2-year high). Donald Trump accuses Europe and China of manipulating its currencies.
U.S. President Donald Trump tweeted Wednesday that Europe and China are playing a “big currency manipulation game” spurring some strategists to consider the possibility that the U.S. Treasury could intervene to weaken the dollar. A strong dollar reduces the competitiveness of US exports. In addition, yesterday's data on the US trade balance showed that it is the lowest in five months, which may also affect Trump's statements.
It is worth remembering that if the US president does not like something, he talks about it loud and clear first, and then takes steps and actions to make the words turn into deeds. Therefore, the scenario in which investing in the dollar may seem a little more risky than before might be taken into consideration. On the other hand, the weakening of the US currency may be additionally helped by interest rate cuts by the Federal Reserve of the United States, which may take place at the end of July.
However, on Friday, key data from the US labor market will appear. Change in employment in non-farm payrolls, average hourly earnings and unemployment rate. The data will be closely watched because yesterday's publication regarding the change in employment in the private sector disappointed investors. The change in employment was 102 thousand with market expectations of 140,000. If Friday's data is also disappointing, it seems that this may be another argument for the possibility of weakening the dollar.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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