Dollar Price Retreats as Investors Anxiously Wait for Payrolls Data to Come OutDecember 2, 2022
From the beginning of December, investors were eager to learn about interest rate hikes. As the news came out about the interest rates going down from the next month, the dollar lost its strength.
However, the weakening interest rates are not the only factor that is impacting the trading price of the dollar. Other factors also have an impact on the dollar’s trading price.
US Jobs Data
Now investors are anxiously waiting for the US jobs data to be released so they can learn about the future of the US economy.
The jobs report is one of the major indicators that investors refer to when they have to understand which direction the economy is to drive.
Based on the jobs report, the Federal Reserve will decide which direction their monetary policy would be driven.
Until the jobs data is released, investors will refrain from interacting with the dollar. They may go for shedding their dollar holdings but they will not buy the dollar until the data is out.
This is the reason why the trading price of the dollar is constantly retreating and is now facing a bearish trend. Multiple factors are causing the price of the dollar to move downwards.
Firstly, it is the interest rates that are to go down, as confirmed by Jerome Powell. Now, it is the jobs data that is due and the investors are waiting for the report to be released.
This way the investors will know which direction the dollar is headed and how they will be dealing with the entire situation.
The DXY Performance
For now, the value of the dollar is moving in a negative direction. This means that the US dollar index is not showing positive figures. Instead, it is moving downstream.
The performance of the dollar against the six basket currencies is mainly negative. The DXY has reportedly moved in the negative direction, having fallen 0.1%, and it is currently at 104.670.
The current low figure that the DXY has hit is a multi-month low. The lowest level the dollar had hit versus the current one was back in August of 2022.
November was a Disaster for the USD
The month of November has proven to be the worst month for the USD in over a decade. It was in the year 2010 when the dollar price demonstrated such a bad performance in any month.
However, the dollar crash has been triggered due to the economic pressure and high inflation that has continued hitting the country.
Therefore, the Feds had to do something to bring the entire situation under control. Their strategy was to increase the interest rates and deal with the problem with utmost aggression.
The inflation rates that the US economy has witnessed in recent months prove that the strategy adopted by the Feds has worked out very well.
According to Jerome Powell, the Feds chair, the situation is now coming under control. They are now ready to lower the interest rate hikes and feel the situation will work out in their favor.
With the low inflation rates coming out in the month of October, investors were already expecting in November for the interest rates to be lowered.
Therefore, the investors did not support the strong value of the dollar anymore. This caused a major plummet in the trading price of the dollar and since then, the dollar has continued declining.
The Feds are confident that the inflation rates would remain under control providing them more cushion to lower the interest rates even more.
Expected Jobs Data
For the November jobs data, the expectations are to see around 200,000 jobs, which is lower than the 261,000 figure recorded in the prior month.
If the job data is indeed lower, then the dollar price would plunge and investors with huge investments in the greenback may face heavy losses.
The dollar value remained flat against the sterling at 1.2254 while it lost 0.5% value against the yen. The Australian dollar surged 0.2% versus the dollar while the greenback lost 0.1% value against the Canadian dollar.