The US currency had a very interesting week. Since Wednesday, when the FED’s decision on interest rates was published, the dollar’s fluctuation against the euro was almost 1% daily.
Unemployment Falls Across the Pond
Friday’s data on the US job market significantly surprised analysts. Unemployment fell from 3.8% to 3.7%. This was caused by the creation of a large number of jobs. Expectations for the nonfarm sector were about 180 thousand new jobs. However, 353 thousand were created. An additional 173 thousand jobs accounted for nearly 0.1% employment. It’s worth noting that average wage increased by 4.5% over the year, a result higher than the 3.4% inflation rate, so real wages are increasing. The market reacted by strengthening the dollar’s exchange rate against the euro by almost a cent. As a result, the dollar is currently the most expensive it’s been versus the European currency since the first half of December.
Other Data From the US
On Friday, we also received the University of Michigan Report and durable goods orders. The report was slightly better than expectations, indicating 79 points while 78.8 points were expected, which in the context of these data is a small difference. Orders for durable goods in December increased by 0.5%, less than the expected 0.6%. Orders for durable consumer goods remained unchanged as expected. The auto industry still has its problems. Industrial orders also matched analysts’ expectations, increasing by 0.2% in December. However, these data were not as important to investors as the job market data, and thus did not generate much attention.
Oil Price Adjustment
Last week began with the barrel price above 83 dollars and ended just over 77 dollars. The reason is another calming of moods in the Red Sea and thus opening of the Suez Canal. On the other hand, we saw forecasts from Kuwait. The country, planning its 2024 budget, assumes an average oil price of 91 dollars. These forecasts, however, consider further output cuts. On the other hand, there is a growing lack of willingness to limit production within OPEC’s own cartel. This scenario apparently doesn’t take into account the current efforts to cease military action in the Gaza Strip.
Today in the macroeconomic data calendar, we should pay attention to the PMI readings for the eurozone and the USA.
Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl and Walutomat.pl
