- The United States Dollar is expected to experience a substantial decrease by the end of the week.
- According to the most recent employment data in the United States, the number of individuals without jobs has increased, and businesses have demonstrated a reluctance to raise wages for their employees.
- At present, the United States Dollar Index is trading below 103.00 and is on the verge of concluding the week in the middle of the 102.00s.
Currently, the United States Dollar (USD) is experiencing its sixth consecutive day of decline, and it is continuing to drop even further. The United States Jobs Report is the source of the impetus behind the change that has taken place in this instance.
The significant downward adjustment of the previous number caused the United States dollar to fall, despite the fact that the nonfarm payroll figure came as a pleasant surprise. As soon as traders became aware that both the unemployment rate and the average hourly earnings were indicating a contraction, they immediately went all in on all of their positions.
To the extent that the economic calendar is concerned, everything is finished for this week. As a result of a significant week in which the US Challenger Job Cuts, the weekly Jobless Claims, and this Jobs Report all indicate a shift in the US economy, the markets are now able to allow the data to stabilize.
Consequently, this presents an opportunity for the Federal Reserve of the United States to implement rate reductions at a meeting that will take place after March.
Summary of Today’s Market Trends
The employment report for the United States in February revealed some unexpected developments, including the following:
- The number of nonfarm payrolls increased by 275,000, which was higher than what was anticipated. Traders failed to take into account the number and instead regarded the drop from the previous level of 353,000 to the current level of 229,000 as an unfavorable shock.
- The growth of the Yearly Average Hourly Earnings was slightly lower than expected, falling from 4.4% to 4.3%. This was in line with what was anticipated.
- The monthly Average Hourly Earnings decreased from 0.6% to just 0.1%.
- The most recent unforeseen occurrence was the rise in the rate of unemployment, which went from 3.7% to 3.9% without any prior warning.
- In the aftermath of the closing of trading in Asia, there has been a slight increase in the degree of movement that stocks are exhibiting. As a result of Powell’s statement that the Federal Reserve is prepared to lower interest rates when economic indicators align, stock prices skyrocketed on Thursday.
- As per the FedWatch Tool provided by the CME Group, the probability of a Federal Reserve pause occurring during the meeting on March 20 is found to be 95%, while the probability of a rate reduction is found to be 5%.
- In the current market, the benchmark for the 10-year United States Treasury Note is currently trading at 4.09%, which is the lowest it has been in over a week.
Next Week Will See Some Profit Taking on Short Positions in the US Dollar
After suffering significant losses as a result of the most recent US Jobs Report, the US Dollar Index (DXY) is on the verge of achieving stability in the middle of the 102 range. This comes after the Greenback experienced yet another decline.
In addition to the fact that employers are reluctant to offer significantly higher wages in order to keep or recruit staff, the most important thing to take into consideration is that unemployment rates are on the rise.
In the coming weeks, it is anticipated that additional information that is pessimistic and unfavorable will be made public. This may be the first indication that the employment sector is undergoing a shift.
In a positive development, the initial recovery level is located at 103.28, which is the 55-day Simple Moving Average (SMA), and at approximately 103.72, which is the 200-day SMA. The 100-day Simple Moving Average is now visible at 103.81, creating a slight barrier in that region.
This comes after the resistance was overcome. The level of 104.60 is the one to keep an eye on on the upside, thanks to the catalyst that is driving the DXY higher.
At the moment, the DXY is trading in uncharted territory, as there are no significant support levels close to it. Even further decline is unavoidable, with 101.75 being the next important level to keep an eye on. Once that point has been traversed, the way is open for another downward movement towards 100.61, which is the lowest point that will be reached in the year 2023.