Greenback on the backfoot following NFP miss, terror attacks in London and the UK Election on Thursday
The USD was hit hard in Friday evening trade following the US non-farm payroll miss, pegging back tightening expectations of monetary policy. However, unemployment fell to a 16 year low as the Fed’s Kaplan said the economy is approaching “full employment”, which suggests to us over the medium term we will start to see wage price inflation return to the US economy. Donald Trump’s decision to withdraw the US from the Paris accord also undermined the Greenback, although according to the terms of the agreement the US cannot effect an exit until the next US Presidential Election, and thus this seems more like a symbolic gesture to his base supporters. The biggest issue for the Greenback is lack of fiscal clarity, which is poised to increase folowing Comey testifying this Thursday. The Dollar will likely remain subdued until the Trump administration can demonstrate some level of support in the House for their Healthcare and Tax agendas.
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