Since the end of last year, the dollar exchange rate has fluctuated without showing any direction. The US dollar weakened in the second half of last year, but lost its direction during the Christmas market and the year-end market. Although activity has been returning since the beginning of the year, no decisive blow has yet emerged to determine the direction of the dollar exchange rate.
From around today, the number of US economic indicators announced will increase. The U.S. jobs report is due to be released tomorrow. US economic trends are important for FOMC interest rate hike pace and terminal rate observations. I would like to examine the content of the US economic indicators through the end of this week.
Today we have US ADP employment figures (December), US trade balance (November), US unemployment claims (December 25 – 31), US non-manufacturing PMI (Purchasing Managers Index) (12 month) are scheduled to be announced. The problem is the market reaction. Normally, a strong indicator would lead to a rise in US Treasury yields, leading to dollar buying, and a weak indicator would lead to dollar selling.
However, since the beginning of the year, the market has become a risk market with an eye on stock trends, and developments are led by the yen exchange rate. As for the US index, it is likely that the weaker index or the cooling effect on the economy will lead to a slowdown in inflation and an easing of the pace of interest rate hikes. It doesn’t seem to be in a situation where it will directly affect the dollar exchange rate.
However, this is not the case if the results have a strong impact and deviate significantly from market expectations. The dollar is likely to move along with the large movement in US Treasury yields. Employment-related indicators are somewhat unpredictable, and caution should be exercised.
While there are no clues, it is assumed that it will be easy to move in the headlines this week.