In the last article we saw how the US dollar had acquired power against other currencies supported by various market movers from the United States.
Analysts had predicted that this week the euro-dollar exchange rate would have suffered a rally, looking to the ECB meeting scheduled last Thursday and the Non Farm Payrolls on Friday.
The expectations have not disappointed and after the ineffective words of Mario Draghi, the exchange rate fluctuations were moved by the US data in a decisive manner that rose from 1,114 to 1,136 in an afternoon.
May data of Non Farm Payrolls were well below expectations and below the encouraging numbers of the previous month, so the market reacted as it was expected.
The bad Friday’s employment data have conclusively dispelled the hypothesis of a potential rising of interest rates by Federal Reserve for the month of June.
The professed optimism of the Fed on US economic growth and the rise of interest rates in June and July were seen by some analysts as excessive. The market, despite the skepticism, believed to the intentions of the FOMC members leading to a rally of the US dollar and discounting in advance the strengthening of the currency in stars and stripes.
But yesterday’s data dampened the enthusiasm, reshaped the ambitions of the Fed of a rise in the next two months and sent back down the spot dollar index that fell by almost two percentage points to 93.8.
The reaction in the Forex has been a marked recovery of all currencies against the US dollar, with euro-dollar that has lived the role of real star, reversing the scenario that was taking shape for weeks.
On Monday, the president of the Federal Reserve, Janet Yellen, will deliver a speech that will be closely monitored by the operators. There is the possibility that Janet Yellen will do bad comments, perhaps giving more details about the upcoming monetary tightening lead institution.
Even the OPEC and the ECB meeting do not have surprised since the first ended in a stalemate for the agreement on the production level, while the second did not bring surprising news but a slight improvement of the estimates on European growth.
The various members of the OPEC have agreed to not set a roof to the output of black gold, believing that for the moment the market is rebalancing itself.
The resumption of production in Canada and Libya, however, leads to downward risks on oil prices although US stocks have started to reduce although they were still at very high levels compared with last week.
However, the Chinese data are not so encouraging after the release of the Caixin manufacturing PMI still being pejorative. The Caixin index of manufacturing resulted in contraction in a recessionary territory (below 50) and rekindled fears of a “hard landing” of the Asian economy.
China will be monitored over the next data since the Asian giant could further unnerve the markets together with the bad US data.
Next week is the transition one, pending the June 15 Fed meeting, an event that is in any case highly anticipated by the market, and it will be important to understand the remaining confidence in the US central bank.
Now let’s see what to expect next week: the euro-dollar exchange rate will start with the Yellen’s speech scheduled for Monday and then continue with a few market movers in the week.
- Tuesday, June 7 – Quarterly GDP Eurozone and non-US quarterly agricultural productivity
- Wednesday, June 8 – US inventories of crude oil;
- Thursday, June 9 – initial claims for US unemployment benefits;
- Friday, June 10 – index on consumer sentiment Michigan.
The week does not seem to offer big market driver after the speech of Janet Yellen on Monday.