विदेशी मुद्रा विश्लेषण और समीक्षा: 11.03.2019

11.03.2019 12:48 PM

Falling risk appetite pushes the dollar up

Extremely weak data on the number of new jobs in the United States frightened investors on Friday, causing a drop in the local stock market, which also had a strong negative impact on trading in Europe.

According to the data presented, the American economy received only 20,000 new jobs in the non-agricultural sector in February compared to the expected figure of 181,000 and the upward revision value of 311,000 in January. A similar minimum number of new jobs was recorded a year and a half ago.

How to explain such extremely negative data? It is difficult to say whether the error in the received data was not taken into account in full on the contrary, which will be known later. For now, not only can this news have a negative impact on the US dollar rate but also supports it along with other unhappy messages.

First, the ECB announced on Thursday following the meeting that it was renewing, albeit in a limited way, but still the program of financing TLTRO banks. Even at the press conference, Mario Draghi tried his best to reassure investors, telling them that one should not expect the beginning of quantitative easing. The markets regarded the new measures of the European regulator as a possible precursor to this event. The single currency paired with the US dollar fell by more than one figure at the moment, dragging along all the major currencies traded in a pair with the dollar.

The decision of the ECB clearly showed that it seriously perceives the risks of an economic downturn in the eurozone, burdened by the uncertainty of the consequences of Brexit. Of course, another negative pressure on the demand for risky assets was a message on Friday stating the date for the meeting between the leaders of the United States and China, said to be advertised by Donald Trump was not established. It seems that, as we have previously stated, the negotiations are extremely difficult and squeaky and what the result will become is not yet clear.

The data on exports, as well as imports and trade balance of China, published on Friday, turned out to be very bad and shows completely that the Chinese economy continues to slow down. Here, it is worth noting that against this background, as well as the actions of the ECB and the publication of weak values for employment in the States, a signal of a slowdown of the economic growth in America becomes clear. Naturally, in this situation, investors are beginning to get rid of risky assets and buy defensive ones, which has led to an increase in demand for US government bonds and currencies such as the Japanese yen, the Swiss franc and, of course, the US dollar.

Given the likelihood of continued negative risk attitudes, the dollar may continue its upward trend today, which may also intensify in the wake of the next negative news or rumors about events around the negotiation process between the US and China on trade.

Forecast of the day:

The EUR/USD pair is trading below 1.1250. If the pair does not grow above this mark, there is a probability of continuing its local decline first to 1.1175 and then to 1.1125.

The GBP/USD pair remains hostage to Brexit and the expectations of a recession in Europe. If the pair drops below 1.2960, there is a chance that it will continue falling to 1.2890.