The recent gain is coming after the U.S dollar approached its two and half year low against major global currencies, after a poor showing in the U.S. jobs data signaled that the world’s largest economy was not all fired up as anticipated earlier.
At the time of writing this publication, the U.S dollar index used in gauging the greenback’s strength against major currencies was up by 0.12% to trade at 90.797 points, having struck a 2 1/2-year low of 90.471 at last week trading session. The euro was trading at around $1.2133, having gained as high as $1.2177, a price level last seen in April 2018.
The macro giving dollar bulls sleepless nights include the recent U.S. jobs data revealing non-farm payrolls gained 245,000 last month, the smallest upsides seen since May, meaning that the jobs recovery pace at the world’s biggest economy was slowing down amid the third wave of COVID-19 infections.
In addition currency traders seem to be readjusting their bets on the bias that such Jobs data report would add more pressure on U.S fiscal officials in passing a new wave of quantitative easing programs in order to support the COVID-19 battered economy, thereby keeping overall risk appetite on course and curbing the U.S. dollar surge against riskier currencies like the Euro, British pound and Swedish Krona.
It now seems the odds of a fiscal stimulus package being passed now as exponentially risen taking to account the prevailing COVID-19 caseloads seen coupled with recent restrictions sighted at California, imposing statewide lockdown.
Although it’s expected that the drop in the US unemployment rate to 6.7% along with the 4.4% increase in hourly earnings will make it challenging for the U.S Federal Reserve Bank in adding more accommodative measures at the December 15/16 meeting, such as extending the maturity of its bond buyouts, means it’s pretty unlikely U.S dollar bears break below the 90.50 critical support era in the near term.
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