U.S. Dollar quiet ahead of labor numbers

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U.S. Dollar quiet ahead of labor numbers

SEPTEMBER 02, 2021

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The U.S. Dollar is trading in familiar ranges this morning as markets digest the jobs data just released. 

Overview

Both Initial and Continuing Jobless Claims came in lower than expected, continuing to dwindle as the labor situation gradually improves for the U.S. Looking at Q2 Non-farm productivity, it was lower than expected at 2.1% under the 2.5% expected, but Unit Labor Costs did significantly climb more than estimated at 1.3% over 0.9%. We shall see figures for July Factory Orders and Durable Goods Orders, tomorrow we get to chew more indicators as the Employment Situation is revealed.

Stock markets remain positive that the Delta variant has peaked and that the recovery should uplift risk appetite for the remainder of the year, but there are some signs of risk-aversion as money goes towards big tech instead of other assets that underperformed when people felt the need to stay careful and mostly inside. For now, the belief is that tapering is coming by December and that the Fed will be very careful before raising interest rates to increase borrowing costs.

What to Watch Today…

  • No major economic events scheduled for today

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EUR  

The Euro has picked up ground once again as its recent rise continues based on the belief that the coronavirus has reached its worst level and better days should come. In fact, those days should arrive with tightening in mind, according to Jens Weidmann, head of the Bundesbank, who in a statement said that it was time for the European Central Bank to “take its foot off the gas” and reign back monetary policy.

While others have not been as hawkish, there is momentum building for taking away some of the measures that have made the financial environment friendlier in the pandemic. The shared currency has appreciated by 1.5% since August 20th.

AUD  

Touching base with the Antipodean currencies, we see they are the only positive movers today with over half a percent rise. Aussie and “Kiwi” are improving based on the reality on the ground that shows the Oceanic people have successfully kept Delta at bay, which bodes well for economic activity as safety measures are lifted.

We shall see if the good vibes remain going into a busy September that will have scientists study the chances of a flare-up as the season changes.

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