- The dollar that has lost the value all year round A comeback had led against foreign currencies in recent weeks. But the jobs on Friday by the BLS – and the downward revision of the previous figures that they accompanied – “did the disturbance from the dollar rally,” says Ing.
The US dollar dropped off a cliff on Friday after the Bureau of Labor Statistics dramatically revised its estimates of how many jobs had created the American economy. As it turned out, the economy was far weaker than everyone had assumed.
The dollar has lost the value all year round. At the moment it is almost 9% YTD compared to the DXY, an index of foreign currencies, flee as investors when President Donald Trump’s tariffs flee. In June the USD reached a low of more than 10%, but in the past few weeks the dollar has won.
Until Friday.
The dollar fell to 98.82 on the DXY this morning – a relatively large step for a currency of the size of the dollar.
Credit: Google Finance
“The dollar index suffered its biggest one-day decline since May 23, when the markets quickly re-evaluated the prospects for interest rates and growth,” George Vessey from Convera told the customer in a note.
In notes to Ing customers, analyst Chris Turner named it: “The turn of the handbrake of the dollar”.
“The Soft Jobs report on Friday came up with the filling from the dollar rally. Investors in September now add a probability of 80% to reduce the Federal Reserve by 25 BS,” he wrote. “The uncertainty about the quality of the US data is not a good look for US assets markets and could bring in more risk premium both in the dollar and treasury.”
Goldman Sachs called it “USD: Whiplash Week”. The bank also published a suppressed note from the chief economist Jan Hatzius that the forecast of the US BIP growth in the second half of the year would be only 1%.
His colleague Kamakhya Trivedi argued, although the “media narrative” pointed out that Trump had somehow won business that are “negative” for the trade partners of the United States, most foreign exports – which go to other countries – are not affected.
“We assume that the United States will bear most of the tariffs that weigh its trade conditions. This is partly due to the width of the tariff, which makes it difficult for US companies and consumers to find suitable substitute substances,” he wrote.
That is why the dollar is so weak on foreign exchanges this morning.
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