The U.S Dollar Index (DXY) declined by nearly 0.28% today following a mixed payrolls report. The U.S. economy added 275,000 jobs in February. Traders had largely anticipated a gain of 198,000. However, the unemployment rate cranked up to 3.9% from the prior 3.7%.
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The unemployment rate has been below 4% for over two years now. The numbers point to workers taking longer to find new jobs, which improves the Fed’s legroom to embark on rate cuts. However, next week’s CPI print remains a key data point to watch.
The DXY has slid by nearly 1.4% over the past month with the rising possibility of a rate cut in June strengthening the Euro and Yen. Additionally, the latest comments from Fed Chair Jerome Powell indicate lower rates if inflation subsides.
In addition, the anticipation of higher rates from the Bank of Japan is lending strength to the Japanese Yen. Meanwhile, the ECB has maintained the status quo with rates at 4%. Still, rate cuts in Europe also seem to be in the cards later this year.
In Asia, inflation could possibly spike as the Red Sea crisis impacts supply chains. Sterling continues to gather strength as traders expect the Bank of England to opt for a rate cut only after the U.S. Fed. The sentiment for the DXY largely remains bearish, as it has spectacularly plummeted from the 103.8 level this week. The next major support for the index is expected at the 101.7 mark.
Source: TradingView
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