After an agreement on an actual truce in the trade war for 90 days was signed between Beijing and Washington at the G20 meeting, the market's attention finally switched to the possibility of a likely pause in the Federal Reserve's interest rate hike in early 2019.
This idea began to gain a foothold in the market after the data published on Friday on employment in the United States turned out to be worse than expected. According to the forecast, the US economy was expected to receive 200,00 new jobs in November against the revised downward October value of 237,000, but the number turned out to be noticeably below expectations, showing only 155,000.
The average hourly wage was also important. In annual terms, it did not grow, remaining at the level of 3.1%. In November, the indicator showed its decline, though not very noticeable, to $34.4 against the forecast of $34.5 and the same October value. On a monthly basis, the average hourly wage in November increased to 0.2% against 0.1% in October, while it was expected to grow by 0.3%.
Against the background of this disappointing statistics, the US stock market resumed its decline, and the US dollar was under pressure. The ICE dollar index continued to fall and this morning at the time of writing of the review loses 0.07%, falling to 96.40 points.
Despite the growing pessimism in the markets, at the December Fed meeting, which will be held on December 19-20, interest rates are expected to increase by another 0.25% with a likelihood of 71.5%. Over the past week, it has fallen slightly from 75.0%, but still remains high. This factor, as well as the function of the dollar as a safe-haven currency and supports its course. The situation can radically change only if the US regulator unexpectedly decides not to raise rates at the December meeting, or even if it does, but will make it clear that a pause in the increase in the cost of borrowing at the beginning of the new 2019 year should be expected. In the meantime, we do not expect strong changes in the foreign exchange market, although the fall of stock indices is likely to continue.
The forecast for today.:
The EURUSD is trading above the support level of 1.1410 on the wave of the local weakness of the US dollar. If the price holds above this level, it is likely to continue its growth to 1.1500.
The USDJPY is above the level of 112.30 on the background of falling demand and rising uncertainty in the markets. If the price overcomes this mark, it is likely to continue its fall to 111.85.
