The greenback has been in a multi-month uptrend, supported by what was deemed a hawkish central bank combined with strong data. Both these factors have come into question recently. The week ahead could help define the path forward for the US currency.
Last Friday’s non-farm payrolls report was woeful. The data disappointed on all fronts. Headline employment missed by 100K and there were revisions to previous months, indicating that there may have even been a loss of jobs rather than any additions. Wage growth was lower while one bright spot was that the unemployment level remaining at 3.6%.
The US dollar weakened as a result, taking GBP back to the well-touted resistance level at 1.2750. The GBPUSD pair failed at this level and has since reversed moderately lower. The week ahead should be an important one for the buck. Two crucial reports will be released on Wednesday and Friday, respectively. First up, inflation numbers followed by retail sales. Both are important metrics from the Fed’s perspective and, if weak, could fuel further chatter of Fed rate cuts for later this year.
Elsewhere this week the pound will also be under close watch. GDP monthly data will be released today as well as manufacturing production and industrial output. Tuesday will see the latest employment report while there’ll also be day-to-day developments on the Tory leadership race as one strong candidate comes under intense fire over the weekend.
Written by Viv Savani. 8:33am, June 10th 2019
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