- US unemployment increases, wage growth relatively slow
- USD loses value after new tariffs announced on Chinese imports
- US Dollar Index drops to 93.76
Inflation statistics in the United States will be closely monitored in the days ahead, although the UK”s monthly growth data and a policy meeting of the Bank of Canada (BoC) will also be important.
Thursday’s inflation data report in the US is expected to come in at 2.9% per year. This could strengthen the Fed’s case for another rate increase or two before the end of the year.
The BoC, meanwhile, is generally expected to increase interest rates by 0.25 points after its Thursday meeting. This would push rates to 1.5%, but increased concerns about American trade policy could force the bank to adopt a wait-and-see approach.
The first data will emerge tomorrow about the UK’s monthly growth. Strong data could improve the chances of a rate increase by the Bank of England next month.
After the US confirmed fresh trade tariffs on Chinese imports on Friday, trade developments will also feature prominently this week.
The USD lost value against a basket of currencies on Friday after statistics showed that although the US economy created more new jobs than anticipated last month, the unemployment rate increased from 3.8% in May to 4%. In addition, wages grew slower than expected.
The chances of another rate increase by the Fed are now slightly lower.
The US dollar index, a measure of that currency’s strength against six large global currencies, dropped to 93.76 on Friday (-0.39%), and the USD ended the week 0.61% lower.
The USD came under renewed pressure Friday as the US and China hit each other with increased import tariffs. The currency dropped by 0.17% against the yen to reach 110.46. It also lost 0.47% against the Euro to reach 1.1744 and 0.48% against the GBP, with the GBP/USD rate rising to 1.3286.