The attention of the foreign exchange market is focused today on the labor market report for May. Esther Reichelt, a currency analyst at Commerzbank, believes that US dollar could strengthen if jobs numbers are strong.
The US labor market as a sustainable engine of inflation and the dollar?
The Fed is likely to want to see some easing in the labor market before considering monetary policy easing.. This could explain why the Fed is reluctant to commit to a prolonged interest rate pause, and as a result, the dollar could quickly recoup yesterday’s losses if we see a strong labor market today. On the other hand, this also means that the inflation outlook, as well as the future course of the Fed and the US dollar, are riddled with great uncertainty.
Consequently, I remain skeptical as to the continuation of the dollar’s rally.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
