- The DXY weakens even more amid employment cuts and concerns for the commercial deficit.
- Challenger’s employment cuts report shows that layoffs increased more than 100% in February.
- The ECB cuts rates at 25 basic points, reviewing inflation perspectives.
- The US applications and US trade balance data highlight economic tensions.
The US dollar index (DXY) is extending its loss streak on Thursday, since new labor and trade market data exert additional pressure on the dollar. Employment cuts increased dramatically, while weekly unemployment applications showed a mixed image of the labor market.
Meanwhile, the European Central Bank (ECB) delivered a widely anticipated rate cut, with President Christine Lagarde emphasizing the need for greater surveillance in uncertain economic conditions.
What moves the market today: US dollar down after a new round of weak labor data, ECB
- Challenger’s latest employment cuts report for February revealed a strong increase in layoffs, rather than duplicating compared to January.
- Continuous unemployment applications rose to almost 1.90 million, pointing out challenges in the labor market despite the fact that initial unemployment applications fell to 221,000.
- The European Central Bank reduced its deposit rate at 25 basic points to 2.50 percent, aligning with market forecasts and maintaining politics on a stable path.
- The ECB raised its inflation prospects by 2025, feeding concerns that persistent price pressures could complicate future policy decisions.
- Christine Lagarde emphasized the importance of a data -based approach, stressing that the ECB should remain flexible in an increasingly volatile economic environment.
- As for the Fed expectations, the CME Fedwatch tool now shows a growing probability of a federal reserve feat in June, with expectations that exceed 85 percent.
DXY technical perspective: the bearish trend accelerates
The US dollar index (DXY) is still under pressure, breaking below key support levels. Simple mobile socks (SMA) of 20 and 100 days approach a bearish crossing, reinforcing the negative impulse. The relative force index (RSI) and the MACD continue to bow down, suggesting additional risks down. If the DXY fails to find support about 103.00, the next key level to be observed is 102.50, which could mark the continuation of the current sale.
FAQS EMPLOYMENT
The conditions of the labor market are a key element to evaluate the health of an economy and, therefore, a key factor for the assessment of currencies. A high level of employment, or a low level of unemployment, has positive implications for consumer spending and, therefore, for economic growth, which drives the value of the local currency. On the other hand, a very adjusted labor market – a situation in which there is a shortage of workers to cover vacancies – can also have implications in inflation levels and, therefore, in monetary policy, since a low labor supply and high demand lead to higher wages.
The rhythm to which salaries grow in an economy is key to political leaders. A high salary growth means that households have more money to spend, which usually translates into increases in consumer goods. Unlike other more volatile inflation sources, such as energy prices, salary growth is considered a key component of the underlying and persistent inflation, since it is unlikely that salary increases will fall apart. Central banks around the world pay close attention to salary growth data when deciding their monetary policy.
The weight that each central bank assigns to the conditions of the labor market depends on its objectives. Some central banks have explicitly related mandates to the labor market beyond controlling inflation levels. The United States Federal Reserve (Fed), for example, has the double mandate to promote maximum employment and stable prices. Meanwhile, the only mandate of the European Central Bank (ECB) is to maintain inflation under control. Even so, and despite the mandates they have, labor market conditions are an important factor for the authorities given its importance as an indicator of the health of the economy and its direct relationship with inflation.
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.
