High Low High Low
EUR/USD 1.0892 1.0822 USD/ZAR 12.0930 12.0065
GBP/USD 1.5097 1.5031 GBP/ZAR 18.24 18.03
EUR/GBP 0.7220 0.7191 USD/RUB 61.20 59.98
USD/JPY 121.13 120.60 USD/NGN 199.7 199.0
GBP/CHF 1.4872 1.4799 S&P 500 2,075 2,067
USD/ILS 4.0305 4.0099 Oil (Brent) 59.90 59.19

The non-farm payrolls report published on Friday was better than market expectations, with almost 300,000 jobs added in the United States in February, and the unemployment rate declining to 5.5%, the lowest level since 2008. The US dollar surged and yields rose in response to the strong data. Market participants are using the weak wage growth data as a reason for the Federal Reserve to hold off raising interest rates. They may be right, or they could just be misreading the reaction function of the US central bank. After all… where’s the harm in a 25bps hike? The next FOMC meeting will be of great interest, because the Fed is likely to drop its pledge to remain patient on rates, which should open the way for imminent action.


Currency markets showed an across the board gain for the greenback with major levels being exceeded, EUR/USD below 1.09 – remember just a few months back when it was at 1.30? Wow…It wasn’t just EUR/USD though, there was USD/JPY trading comfortably above 120, USD/ILS above 4.00, USD/MXN at 15.50. In summary there were many significant moves with currencies of all regions weakening against the US dollar. It appears that US economic strength is starting to boost other economies with China registering a record trade surplus last month. If there is one prayer central bankers around the world have in common, it’s the hope that US economic momentum drags the rest of the globe into recovery. I suspect it’s a forlorn hope, but it appears to be working at the moment.


I’ve been heartened to see that deflation fears are subsiding, and the benefits to the consumer of lower energy prices are starting to be felt. Well… ahem.. I think we said that months ago! But now we’re starting to see the hard evidence, with annual retail sales amongst advanced economies rising at their most rapid pace since 2006 apparently. The ECB will claim some credit because of its QE programme, but personally I think consumers were smart enough to realise that lower energy prices are a transient phenomenon, but don’t mind me!


I remain cautious about the US dollar from here. As I mentioned in recent blogs, there are signs of weaker price momentum, and a significant reversal is a possibility. If you are selling dollars, you may not get better prices than these for months to come.






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