US Dollar Falls to a Three-Week Low Post Soft Wages Data

Equities

US indices rose on Friday to end the week on a higher note after US jobs data. The strong performance of the US indices continued during the Asian session where the Dow Jones Industrial Average climbed to a two-week high of 24611. Indices were under pressure in the past weeks due to the trade spat between the United States and major economies. However, US stocks found support from the fact that the US economy added 213,000 jobs in June which confirms that the United States economy is still in the expansionary face. Moreover, the average hourly earnings stood at 2.7% versus an expectation of 2.8% which could ease the hawkish tone of the Federal Reserve. Stocks could face some volatility in the coming weeks as we approach the earnings for the second quarter. If the trade war between the US and China prevails, firms will be under pressure, and we will be seeing the effects on the earnings later this year.

USD

The greenback kicked-off the trading week on the back foot. The dollar index, DXY, which measures the strength of the dollar against a basket of currencies fell during the Asian session to break below the 50-day simple moving average. The dollar traded near a one-month low against the euro, where EURUSD posted a high of $1.1778 during the Asian session. Despite the addition of 213,000 jobs last month, the wages data were less than anticipated which pressured the dollar. The participation rate rose from 62.7% to 62.9% taking the unemployment rate higher to 4.0% from 3.8% prior. In general, the US economic data show that the US economy is robust and signals that the Federal Reserve could continue raising rates at the same pace. However, the Fed will be cautious and pay more attention to the inflation numbers as rates approach neutral level.

GBP

The British Pound traded at the highest levels against the United States Dollar since June 14. The currency gained strength last week post strong economic data and cabinet meeting that discussed a Brexit deal strategy on Friday. However, the British pound remains vulnerable to the development in this matter especially after the resignation of David Davis, the Secretary of State for Exiting the European Union, and two other ministers during the weekend.

Metals

Gold prices recovered from Friday’s losses after the follow-up meeting to the Trump-Kim summit. The North Korean Foreign Minister met with the US secretary of State Mike Pompeo and issued a statement saying that the meeting was “regrettable and betraying the spirit” of the Trump-Kim summit. The bullion rose to a two-week high of $1262 during the Asian session. On the other hand, the silver ounce gained almost one percent to trade at a high of $16.16, the highest level since June 27.

Oil

Oil prices ended mixed on Friday where the WTI rebounded from a one-week low whereas the Brent oil posted the lowest close in a week. The West Texas Intermediate bounced-off a low of $72.16 to close higher at $73.87. On the other hand, Brent oil settled at $77.10, down 1.5% on the week. Baker Hughes reported on Friday that the US oil rig count rose to 863 from 858 prior.

Major Economic Events

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.