Daily Market Update

Labor Sector Improves, Buck Holds Gains

September 04, 2020

The U.S. Dollar is trying to close the week with a gain following days of growing doubt about equity market valuations and growing faith in the U.S. economic recovery.

Overview

A sense of stocks climbing too high has aided the buck but in particular market participants seem to be more optimistic about an end to the pandemic via a medical solution now that multiple regions are promising vaccines and in Denmark, there are ways to combat those who have COVID-19. Technology stock finally plunged after growing incessantly since the pandemic sent us home in March.

Additionally, Fed officials have made comments trying to ease any speculation of dramatic easing from the Fed as they explain that the mandate of price stability is still there, just more leniency on inflationary growth to allow economic growth. Data also is helping make a case for dollar re-strengthening as Non-Farm Payrolls came in higher than expected with the Unemployment Rate also falling from 9.38% to 8.4%.

Furthermore, Average Hourly Earnings were estimated to stay flat, yet grew 0.4% in August. The slow climb to stability may bode well for the buck, but as we mentioned in the September Outlook, expect dramatic shifts and swings as statements are made and central banks meet. 

 

What to Watch Today…

  • No major events scheduled for today

Complete Economic Calendar can be found here.

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EUR

The Euro is not jumping and has fallen 1.0% since Monday after the serious impact of statements from the ECBs Chief Economist Philip Lane on a note. Europe certainly wants to encourage its exporting front, something that can run into difficulty as a more skeptical and wounded world handles globalized business and tries to spare expenses.

Additionally, German data this morning showed that things slowed down a bit in August as German Manufacturing slowed in pace to 2.8% when 5.0% was forecast and Construction PMI failed to reach an expansionary reading. Euro may test a lower bound next week if any other elements play against it.

 

GBP

The Pound also declined by over 1.0% this week with a combo of low expectations economically, bad news on Brexit, and political struggles. Prime Minister Boris Johnson has tried juggling between business interests and nationalistic ones for a very long time and Brexit concerns are growing intensely. We do not foresee a lot in the U.K.’s favor so something of major significance must happen in talks to make fears of the crisis go away.

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