Economic Round-up, U.S. Dollar Strengthens

On Tuesday the U.S. dollar continued its climb strengthening with the Dollar Index at above 92.50 levels.

Since April 17 the dollar has gained 3.93 percent to above 10 week high levels, the rally in the dollar was not impaired even though the U.S, jobs report showed lower than expected increases.

Fed Leaves Interest Rates Unchanged

The Federal Reserve held interest rates at their last meeting on Friday at 1.75 cents which was widely anticipated by markets.

U.S. Non-farm Payrolls

The report by the Fed came after the release of the U.S. non-farm payrolls report which showed an increase of only 164,000 jobs added compared to the forecast by analysts of 189,000. The average hourly earnings were at 3.1 percent compared to an expected 0.2 percent.

Dollar Shrugs of Report

The release of the data had little effect on the U.S. dollar which continued its rally to a five month high and is now over 74 percent since the selloff in December.

Solid economic data has also supported the dollar which has been helped by the tax cuts and spending with traders buying back dollars.

Look Out for Next Fed Meeting

The next Fed meeting in June is expected to result in interest rate hikes is likely to affect the dollar which at the moment is being propped up by strong treasury yields.

Key Development

The historic key development will be the decision by U.S. President Trump’s decision on whether he will pull out of the Iran nuclear deal (which is widely anticipated) on May 12.

Market Volatility

Markets are expected to see volatility leading up to his decision, with West Texas crude oil prices gaining over 14 percent so far since February leading up to May 12.

Weakness in the Euro

A slide is expected to continue for the euro which has been in a downward trend since the middle of April and is 3.5 percent lower against the dollar. On Monday the euro was at a four month low at $1.1987.

Upcoming Calendar

On May 10 the Bank of England and the Reserve Bank of New Zealand will release their data, with decisions regarding interest rates. Both are expected to hold interest rates with no changes.

Metals

Gold gained breaking 1,308 level and falling to 1,301 level on the back of a strong dollar and remains volatile.

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