Daily Market Update

Employment lifts buck slightly, Inflation up in Europe

May 03, 2019

The U.S. Dollar is trading in favorable ranges after the release of the Employment Situation which revealed the lowest unemployment rate in about 49 years and the addition of 263K jobs to the economy, when only 188K was expected.

Overview

The greenback is now even for the week after recovering losses experienced since Monday based on better data in Europe. Indeed, the buck keeps getting rewarded for having impressive numbers, but a closer look Average Hourly Earnings and Manufacturing does show that not all aspects have momentum.

Although wages increased, they did not meet the 0.3% expectation for the month of April and Manufacturing jobs only came in at half the expectation. No doubt, the labor sector is strong, which solidifies the Fed’s stance on not doing much or anything at all to interest rates this year.  We shall now be at the mercy of headlines since very little data is coming up next week until we get Inflationary growth Friday.

 

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

 

EUR

The Euro failed to rise, but it shall be note that inflationary figures in the form of Consumer Price Index came in beating expectations. CPI in April rose by 1.2% instead of 1.0%, thus bringing the annual average from 1.6% to 1.7%.

April certainly outdid March and these piggy-backs on an overall better picture recently based on stronger manufacturing and production. Euro did not rise, but slowly yet surely some signs of a return to improvement could shape Euro prospects upward.

 

MXN

The Mexican Peso is down by half a percent thus far this week, primarily losing ground as oil prices witnessed a 6.6% drop since April 25th. The central bank, Banxico, has also been increasing its foreign reserves, thus circulating more Pesos out there as other currencies and gold are brought in. Mexico has taken a neutral position on the political crisis in Venezuela and could see swings in its favor if we see an escalation to the problems in South America.

 

For now, fundamentals are steady, the new government has not changed things in any dramatic way as some thought, and its economy and geography could lead to gains based on being a safe hub for investment in Latin America. Our forecast for Peso is still relatively accurate as these current ranges are manifesting themselves.

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