The long-awaited US economic slowdown from the second Covid-19 wave never arrived but the absence of dire statistics has not been enough to lift the dollar from its five-week slough though USD was boosted by better than forecast August manufacturing ISM. Good news is required and the best would be a surging job market, FXStreet’s Joseph Trevisani reports.
Key quotes
“Non-farm payrolls are forecast to rise 1.4 million in August, down from 1.763 million in July and the smallest gain since the recovery began in May.”
“The unemployment rate (U-3) is predicted to fall to 9.8%, the lowest since the pandemic shutdowns peaked in April, from 10.2% in July. The underemployment rate (U-6) is projected to rise to 17.3% in August from 16.5% for July. It would be the first increase since April. Average hourly earnings are estimated to be flat in August after July’s 0.2% gain. Annual wages should fall to 4.5% from 4.8%.”
“Despite the five-week decline in the dollar, the market appears to be reassessing the state of the US economy and responding to statistical improvements. Tuesday’s August manufacturing PMI, 56 on at 54.5 forecast and the highest reading since November 2018 is an example. The dollar has not reversed but it may have reached its negative limit on current US conditions. From here it follows the course of the American economy.”
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