The U.S. dollar is mixed against major pairs. Safe havens like the Swiss franc, Japanese yen and the euro have gained against the greenback, while the Canadian and New Zealand dollars along with the pound are lower. Strong data in Europe boosted the single currency but the rally was short-lived after the Trump administration announced a review of US-EU trade that could result in a 20% tariff on European car imports.
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.
Yesterday’s FOMC Minutes brought exactly the lightbulb moment we not only expected but discussed at length since their meeting earlier this month. The only problem, how poor Eurozone growth and sentiment data has been. Even though the Federal Reserve has telegraphed that they are willing to let inflation run past their 2% target without forcing a faster pace of rate hikes, the dollar remains elevated.
Data from Europe this morning fell short of expectations, but the real catalyst was the Dollar’s mission. First, German GDP, ZEW Sentiment and Eurozone Industrial Production all missed. U.S. Retail Sales missed expectations as well, although last month’s read was revised better.
The U.S. dollar appreciated against major rival currencies on Friday. The dollar rally is back on after the two of the largest parties in Italy agreed to form a coalition government and Japanese inflation retreated. Although there is no plan for Italy to exit the European Union it could put it to the test with its fiscal strategy.
Today is fairly light on the data front. The only notable exception will be Canadian inflation and retail sales figures, which will be released later at 13:30 BST (08:30 EDT). CPI inflation is expected to have risen in April by another 0.3% like it did in March. Meanwhile, retail sales are also expected at have risen by 0.3% month-over-month in March, while core sales, which exclude automobiles, are expected at have risen 0.5% after the previous month’s disappointing flat reading.
The U.S. dollar rally lost momentum during the week and recorded its third day of depreciation versus other major pairs. The U.S. dollar continues to gain versus emerging market currencies as more signs of a global growth slowdown appear. The US consumer price index (CPI) came in under expectations and raised concerns on how many rate hikes could the Fed get away with in 2018.