Dollar Holds Most of Friday's Gains

 

 

USD

The U.S. dollar is struggling to find new ranges against a number of its major counterparts following Friday’s strong non-farm payrolls data.  The greenback had been under pressure, losing for five consecutive months and four consecutive weeks as political drama and softening economic data led traders to lower bets the Federal Reserve will raise interest rates again this year.  However, Friday’s jobs data impressed and sent the dollar soaring across the board.  The dollar gained 1% against the Euro in the hours following the report.  Wage growth and a tightening labor market may cause inflationary pressures to build and give the Federal Reserve the scope to raise rates again in December.  We will get a closer look at producer prices on Thursday and consumer prices pressures on Friday, which represent the two largest risk events of the week.  

Today, there is only second tier data on the schedule, but policy maker James Bullard will speak on the U.S. economy in Nashville later this morning.  In the afternoon, the Fed’s Kashkari will speak in Minnesota.  These are the first two Fed speakers following last week’s jobs data so market participants will be paying extra attention.  

 

EUR 

The Euro recovered somewhat overnight after falling 1% against the U.S. dollar on Friday on a strong American jobs report.  The Euro’s resilience is on display this morning considering the currency has gained even on the back of weak German economic data.  German industrial production unexpectedly fell for the first time this year.  Production fell 1.1%, missing estimates of a 0.2% gain. 

The Euro remains within 1% of its highest level since January of 2015.  

GBP  

The British pound was unable to recover from the dollar’s run on Friday as “Brexit” related headlines keeps the Sterling in check.  The Telegraph reported that the U.K. will offer 36 billion pounds to the European Union to settle the divorce between the two parties in return for discussion toward a future trade deal.  Prime Minister Theresa May’s government pushed back on the report.  The European Union and the U.K. are set for a third round of Brexit talks later this month.