Source: IG Charts
US Dollar Price, News and Analysis:
- US Jobs Report beats expectations but unemployment remains worryingly high.
- Congress still debating the second coronavirus relief bill.
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The US dollar has picked up from its recent 27-month low but the move lacks conviction and may fade lower due to increased political uncertainty. The latest US Jobs Report showed the economy adding 1.7 million jobs, with wages rising and the unemployment rate falling. All numbers beat expectations but the US unemployment is still over 10%, compared to 3.5% in February this year, while nonfarm employment is lower than its February level by 12.9 million, according to the US Bureau of Labor Statistics.
DailyFX Economic Calendar
The second coronavirus relief bill is still being debated in Congress with both sides refusing to budge so far. Finding a solution is becoming more urgent as the clock ticks after the $600 a week unemployment relief package expired at the end of July. If the new package is passed, and it is eventually expected to, the US dollar printing press will be working overtime again, putting downward pressure on the greenback.
In addition, US President Donald Trump continues to ramp up the pressure on China with tech companies now in his cross-hairs. The President last night threatened restrictions on two popular Chinese social media companies, TikTok and WeChat, as well as threatening to de-list Chinese companies quoted on US stock exchanges unless they comply with US accounting standards. Retaliation is expected from China.
Forex Fundamental Analysis – News that Matters
US Treasury yields continue to sit at or on record low levels due to the ongoing printing of US dollars. These miserly yields offer little support to the greenback and they are unlikely to do so in the future either with rates expected to stay low for the distant future.
The daily US dollar basket (DXY) chart shows a potential area of support around 92.50 with Friday’s candle pushing towards the recent double-top around 94.00. Above here would add some positive sentiment to the greenback, especially if it could break and open above the 20-dma around 94.17. The rest of the chart, however, remains negative and it remains to be seen if this recent bounce-back turns into something more long-lasting or if it is just a brief respite before the USD turns lower again. Fundamentals will continue to drive price action in the greenback.
US Dollar (DXY) Daily Price Chart (January – August 7, 2020)
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