The growth of the dollar contributes to several factors. The first is the report on employment in the United States and the high activity of the manufacturing sector. The growth of the dollar contributes to several factors. The first is a report on employment in the United States and the high activity of the manufacturing sector. Judging from the published data, the temporary suspension of the government's work did not have a particular impact on the labor market and the economy as a whole. However, there are several points that can spoil the overall picture. The wage growth rates have declined despite the strong labor market. If we add here the Fed's more cautious attitude about the monetary policy outlook, the dollar outlook does not look very convincing.
The Fed does not manifest caution for nothing. Issues on Brexit, the slowdown in the economy, the problem of financing the work of the US government and the trade conflict between the US and China are serious arguments in favor of not tightening monetary policy. But, on the other hand, all these problems can be solved in the next few months. Let's say Congress will approve the constant increase in costs, the UK will make a deal with the EU under Brexit and Trump will refuse new tariffs for Chinese imports, then two rate increases this year can be justified. At the same time, negative developments will lead to market chaos. Hence, the dollar in all these turmoil has every chance to move to a decline.
All economic releases of the coming week, ranging from producer price inflation in the Eurozone and ending with retail sales and GDP, may unpleasantly surprise the markets. The weakness of the US dollar is the only reason why the EUR/USD pair rose last week and the lack of economic data for the US this week makes the mark of 1.15 a strong resistance level. Also, the recovery of the US dollar has limited the growth of AUD and NZD, despite the strong indicator of business activity in the manufacturing sector of Australia.
