AUGUST’S EMPLOYMENT REPORT WILL BE KEY TO THE DOLLAR
The employment report for August, which will be released on Friday, will determine the further dollar rate, says Favad Razagzada, an analyst at Forex.com.
On Wednesday, the currency registered a gain, thanks to the weakening of the euro and favorable indicators on Wednesday.
If the situation on the labor market remains healthy and wages continue to grow, we should expect an increase in rates in December, which will lead to interest in the dollar, he explains.
Some experts explained the continued weakening of the dollar by the mixed nature of the data, the uncertainty in Washington and geopolitical tensions, in particular the confrontation between the US and North Korea.
“It seems that the combination of expectations regarding the normalization of interest rates by the Fed, instability in the White House and geopolitical tensions led to the loss of the dollar as a” safe haven “,” says Joel Kruger, currency strategist at LMAX Exchange.
Some analysts are convinced that the currency is waiting for recovery, after the Fed announced details of the program to reduce the balance at the September meeting.
In addition to employment, Friday will report on business activity in the manufacturing sector.
In Europe, expectations about the beginning of tightening of monetary policy of the ECB are growing. At the meeting of the central bank on September 7, Mario Draghi can express his opinion on the growth of the currency.
The weakening of the euro will support the dollar.
The single currency reached a 31-month high, $ 1.2073 on Tuesday, before passing below $ 1.20.
Alvin Ten, currency strategist at Société Générale, fears the ECB’s intervention in the foreign exchange market.
The historical average for the euro is at around $ 1.21, above current levels, but the central bank is more concerned about the rate of currency growth than its value, he notes.
In Germany, meanwhile, elections will be held on September 24, and Chancellor Angela Merkel hopes to be re-elected for a new term.