Asian stocks were under renewed selling pressure this morning as global trade concerns and chaos across emerging markets weighed on risk appetite. Global trade developments have certainly placed investors on an emotional roller-coaster ride this week with the initial optimism over NAFTA talks outweighed by U.S.-China concerns. Market sentiment is likely to remain cautious, especially after President Donald Trump threatened to withdraw the United States from the World Trade Organisation.
The U.S. dollar fell on Friday after the U.S. Non-farm payrolls (NFP) came in below expectations with only a gain of 157,000, but otherwise the unemployment rate dropped to 3.9% and wage growth remained unchanged at 0.3%.
The U.S. dollar is higher against major pairs on Friday after a strong US jobs report was published. The U.S. nonfarm payrolls (NFP) report showed the economy added 223k jobs last month driving the unemployment rate to a 18-year low of 3.8 percent. Wage growth surprised to the upside with a 0.3% gain that validates the comments from U.S. Federal Reserve members about the need for more rate hikes this year.
The U.S. dollar gained against major pairs thanks to strong economic indicators and the end of month and quarter flows. The greenback had a positive week ahead of the Easter holiday. The first week of April will kick off with a plethora of U.S. economic data, the most important of all the U.S. non-farm payrolls. Central banks will get back into action with the Reserve Bank of Australia (RBA), although no changes to monetary policy are expected in the next meeting.
The U.S. dollar will finish the week ending May 12 higher across the board against major pairs. Despite the dollar rally losing steam as softer economic data was released the U.S. Federal Reserve kept the June rate hike on the table boosting the greenback on a monetary policy divergence basis. The central banks of New Zealand and England issued statements this week and made it clear that there are no rate changes coming soon, unlike the U.S. central bank.
Mexican airports and tourism operators are fast becoming a hotspot for investors betting they will escape the trade-related worries that have squeezed some other assets there, with lingering weakness in the peso seen providing further upside.
The U.S. dollar is weaker against major currencies across the board after the Fed hiked rates for the third time since the financial crisis but lacked upgrades to the economic projections. A proactive but patient Fed with other central banks standing pat meant the forward looking forex market came away with a less hawkish view on future interest rates and sold the U.S. dollar.
Comments from members of the U.S. Federal Reserve have put a rate hike in March back on the table. Lack of details on the Trump administration pro-growth policies had reduced the probability of the central bank raising interest rates but the words from Chair Yellen and other influential members now have the market pricing in an 80% probability of a rate increase on March 15.