Written by Steven Dooley and Shier Lee Lim
USD lower as jobs gain, but wages ease
The US dollar was sharply lower on Friday after an almost “perfect” US jobs result saw an increase in employment numbers but a decrease in average earnings.
The number of new jobs in the non-farm employment series was up 275k in February – well above the 200k expected.
However, average hourly earnings were up only 0.1% (less than the 0.2% expected) while the unemployment rate climbed from 3.7% to 3.9%.
This cooldown in wages, most notably, allows the Federal Reserve to cut interest rates if needed.
As a result, the greenback was weaker on Friday, with the USD index hitting two-month lows.
Euro higher after ECB
The euro ended the week stronger with the majority of the recent conversation from the European Central Bank leaning toward hawkishness.
At last week’s ECB meeting and the previous minutes, discussion about rate cuts was seen as premature, with the focus last week on expectations that the ECB won’t cut rates until June at the earliest.
Rather, the ECB has to “stay the course” and move on with “steady hand.” The disinflation process was seen to be happening “at a slightly faster pace” than anticipated, and the March inflation estimate for 2024 was reduced due in part to decreasing energy costs.
Green shoots in China?
Chinese equities have recently improved and the gains have aligned with other better data releases.
The most recent travel trends seen over the 2024 lunar new year holidays are supportive of our positive outlook, since worries about China’s poor spending trends have been dragging on the airline sector’s share price since 2023.
Airport duty free stores are becoming more competitive as outbound tourist trends improve since airports serve as important entry points for international travel.
We are more positive on China’s equity markets with some indications showing that Chinese shares might have bottomed.
USD hits two-month lows
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 11 – 16 March
All times AEDT
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
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