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US job data boosts dollar recovery, pushing euro down

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The week started when US data lanes hit the market. As expected, the release impacted the market, fueling the recovery of the US dollar and the fall of the euro. The main reason behind the outcome lies in traders’ belief that the data could lead to rapid rate hikes by the Fed. Lee Hardman, the MUFG analyst, talked about the development. According to Lee, Christine Lagarde clearly signals the chances of a rapid rise in the currency market. The euro has underperformed in recent months, buoyed by expectations of the ECB to maintain an accommodative policy. It also relied on the belief that the Fed and BoE will tighten their policies. Lee added that market participants are more likely to reach a short position in euro financing. Although the European currency fell only 0.2%, the figure of $1.1425 caused regulated brokers to switch to the dollar. The move was natural because the euro’s recent gains were fueled by the ECB’s help. Since it helped lift interest rates in the eurozone, bond yields have skyrocketed as well. Martins Kazaks, an ECM policymaker, argued against everyone’s speculation about a rate hike during a July interview. Martins stated that the bank may end its stimulus program sooner than planned. However, it is highly unlikely that the institution will raise its interest rates. The US dollar fell 0.2 percent to 114.94 yen. Although the pound fell 0.1 percent to $1.3511, both currencies remained in the middle of their previous ranges. According to Mark Haefele, CIO at UBS Global Wealth Management, the euro will fall to $1.10 by the end of the year, while the dollar would rise against the Swiss franc, ending the year at 0.98 francs per dollar. , an increase of 0.92 from now . The dollar received some support Monday, helped by rising US Treasury yields. The dollar index rose 0.1 percent to 95,483, from 95,136 last week for the employment report. The safe haven found support in the shape of US Treasury Yields which rose after the release of jobs data this Friday. As the markets have reached a one in three chance, the Federal Reserve could gain 50 basis points in March. In fact, many believe that the percentage could reach 1.5% by the end of 2022.
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