Dollar weakness persists

Friday’s non-farm payrolls disappointment has seen the dollar’s resilience brought into question.

Source: Bloomberg

The UK has enjoyed a four-day weekend and has had plenty of time for Friday’s disappointing non-farm payrolls figures to be absorbed and a calm assessment reached. Initially the headline figures were unsatisfactory, however the longer-term trend of US unemployment is still very strong and hourly earnings are looking firmer too. Just as one swallow doesn’t make a summer it is unlikely that the Federal Reserve will baulk too much at these latest figures – especially as it is so prone for revision. Rather than bring into question of a later start date to the US interest rate it is more likely to have ensured that it is not brought forward.

Having seen weakness for a few days now in the dollar helping push GBP/USD higher, it looks like we may well see the top end of the recent range $1.500 tested again. However, I am not sure I have seen anything that alters my opinion this recent bounce is not just offering us better levels with which to short, only a close above $1.500 would give me reason to question this.

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Yanis Varoufakis, the Greek finance minister, has confirmed that Greece will meet Thursday’s deadline to repay €450 million to the International Monetary Fund. This was a categorical statement aimed at easing global fears over the country’s ability and willingness to pay its debts. How fully the global community believes the country has the ability – or inclination – to do this is another question.

This morning will see a plethora of eurozone services PMI figures released. This will give a more accurate assessment of exactly how successful the eurozone’s efforts to get its recovery going are.

EUR/USD yesterday flirted with the 50-day moving average again and had the look of a currency cross hoping for more. That being said, it is a month since EUR/USD was able to close above $1.100 and a questionable period with a lack of stability still looks like the short-term agenda for the euro.

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