The positive U.S. labour market data, together with last week's better-than-expected inflation data, could be next step toward further interest rate hike by the Fed.
The U.S. Labour Department released the long-awaited labour market today. The U.S. economy added 242,000 jobs in February, exceeding expectations for a rise of 190,000 jobs, after a gain of 172,000 jobs in January. The U.S. unemployment rate remained unchanged at 4.9% in February, the lowest level since February 2008, in line with expectations.
It could mean that these data would be enough for an interest rate hike in March. But there is a "No" as wages dropped in February.
Comments by New York Fed President William Dudley could mean that Fed officials also remained divided if there was no deterioration in the U.S. economy. He said on Tuesday that the downside risks to the U.S. outlook increased.
I think that the Fed will not raise interest rate in March, but an interest rate hike in April is possible if the U.S. economy continues to improve.
Oil prices were volatile again this week. Oil prices were supported by news that that top oil producers could cooperate to stabilise the oil market continued to support oil prices. Nigeria's petroleum minister Emmanuel Ibe Kachikwu said on Thursday that the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members will meet in Moscow on March 20.
Oil prices are likely to remain volatile until a deal on an oil output cut is reached.
Low oil prices weigh on inflation. The European Central Bank (ECB) is likely to add further stimulus measures next week. I would say that the likelihood for further stimulus measures is almost 100%, but I don't think that decision will be a unified decision. The ECB could cut its deposit rate further or expand its monthly asset purchases.
Further monetary policy easing is likely to weigh on the euro.
It is likely that the currency pair EURUSD will rise toward the resistance level at $1.1100 or at $1.1200, if the U.S. economic data will be negative or there will be negative news from China and no further stimulus measures from the ECB (or small volume of further stimulus measures) will be announced.
If the U.S. economic data will be positive and in case of further stimulus measures from the ECB, the currency pair EURUSD may test the support level at $1.0800 or $1.0700.
Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.
© 2011-2020 TeleTrade-DJ International Consulting Ltd
TeleTrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.
The company operates in accordance with Markets in Financial Instruments Directive (MiFID).
The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. TeleTrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.
TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.
TeleTrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.