The US dollar strengthened against its major trading partners early Tuesday, with the exception of a drop vs the yen following the long holiday weekend, as investors focus on August jobs statistics.
With the Federal Reserve currently focusing more on employment difficulties, a second consecutive lackluster report this Friday would raise expectations for a greater rate cut at the September 17-18 meeting.
The quiet period before of the Federal Open Market Committee’s September 17-18 meeting begins on Saturday, so Fed officials may speak after the report on Friday.
Thursday will see the publication of challenger layoffs, weekly jobless claims, revised productivity and labor costs, and service readings. Following the jobs report on Friday, the St. Louis Fed is expected to offer an update to the GDP estimate.
Currency volatility in the FX market increased Monday as US markets reopened following the lengthy Labor Day weekend and data releases took precedence.
The slack in the manufacturing sector has been priced in for some time, and analysts believe a relatively soft number is required to raise recession warnings and drive the currency considerably down. The consensus predicts a minor improvement in August, from 46.8 to 47.5.
A quick summary of foreign exchange activity heading into Tuesday showed that USDEUR fell to 1.1035 from 1.1072 at the Monday close and 1.1067 at the same time Monday morning. There are no Eurozone data on Tuesday’s schedule. The next ECB meeting is scheduled for Sept. 12.
GBPUSD fell to 1.3121 from 1.3147 at the Monday close and 1.3136 at the same time Monday morning. There are no UK data on Tuesday’s schedule. The next Bank of England meeting is scheduled for Sept. 19.
USDJPY fell to 145.9138 from 146.8849 at the Monday close and 146.8150 at the same time Monday morning. Overnight, Bank of Japan Governor Kazuo Ueda repeated his previous comments that the BOJ will raise interest rates further if the Japanese economy evolves as expected, according to Bloomberg. There were no Japanese data released on Tuesday.
The next Bank of Japan meeting is scheduled for Sept. 19-20. USDCAD rose to 1.3540 from 1.3493 at the Monday close and 1.3496 at the same time Monday morning. Canadian manufacturing PMI for August is set to be released. The next Bank of Canada meeting is scheduled for Wednesday, when the BOC is expected to lower its target rate to 4.25% from 4.50%.
