The US dollar strengthens due to weak competitors. Its growth is also fostered by strong macro statistics and hopes that the US economy will be much more resistant to trade wars than others. Business activity in the non-manufacturing sector from the Institute for Supply Management in August should remain unchanged, according to a forecast from Bloomberg. The economic surprise index is steadily going up, and its divergence with the dynamics of rates on US state funds suggests that the main reason for the monetary expansion of the Fed is not the state of the US economy, but international risks.
Data on the labor market will be released on Friday, from which market participants are likely to find out that in August 175 thousand jobs were created outside the agricultural sector in the United States. As noted in the CIBC, the formation of vacancies has been declining since the second half of last year, while the pace remains above long-term trend values.
The initial jobless claims rate is in the area of cyclical lows. The Conference Board in its report on consumer confidence reports on the availability of a large number of available seats. Based on their forecasts, wages increased last month by 3.4% in annual terms. All of this indicates that the US labor market remains healthy.
The slow pace of creating new vacancies will be offset by rising wages, lower interest rates and savings that will allow consumer spending to remain up to standard.
According to CIBC experts, the US labor market data will exceed expectations at the end of the week, and this will trigger further growth in the dollar.
Since last Friday, the greenback has grown quite strongly in price, including the euro, sending the main currency pair to the levels of spring 2017. Although there are plenty of reasons to pull down the single currency, inaction by the United States looks very strange. The growth of the dollar further slows down the country's economy and weighs on Donald Trump as the current president and his candidacy for the next term.
It is worth noting that on Tuesday, September 3, Americans are coming out after a long weekend. It is very interesting what the owner of the White House will do in this situation. It is noteworthy that all this is happening against the backdrop of attempts by British MPs to block the "hard" Brexit.
