US Dollar struggles to stay above 105.00 despite evidence that the US labor market is cooling.
In Friday’s European session, the US Dollar Index (DXY) is trading near the key support level of 105.00. The USD Index is struggling to maintain the aforementioned support as investor confidence in the Federal Reserve’s (Fed) decision to begin lowering interest rates following the September meeting has grown. This has also enhanced investors’ risk appetite. S&P 500 futures have made huge increases, indicating robust demand for risk-sensitive assets.
Cooling US labor market conditions increase Fed rate cut bets.
Expectations for the Fed to begin lowering interest rates at the September meeting have risen. As recent job data show that labor market conditions are slowly softening. On Thursday, the United States Department of Labor revealed. That the number of people filing unemployment benefits for the first time in eight months was at its highest. For the week ending May 3, Initial Jobless Claims (IJC) were 231K, much higher than the consensus of 210K and the previous figure of 209K. Which was revised up from 208K. In addition to increasing unemployment claims. US firms added fewer positions in April. Fresh nonfarm payrolls (NFP) were 175,000, the lowest level in six months.
Focus switches to the United States Inflation
Investors relied on Fed policymakers’ speech this week to forecast US Dollar movements in the absence of top-tier economic data. Next week’s US economic calendar will be jam-packed with data as the Producer Price Index (PPI). Consumer Price Index (CPI), and Retail Sales figures are scheduled for release. The main event will be the consumer price inflation data, which will influence market expectations of Fed rate cuts.
