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Friday 2 September 2016

How the employment report will affect the dollar?

In anticipation of today's release of the report on employment in the non-farm sector of the US, investors have started to fix profit on their long positions on the dollar. The release from positions has been associated with a weak index of manufacturing activity from the ISM, but today will be a tense day, so some traders also decided to reduce their dollar assets. Officials from the Federal Reserve made it clear, that the decision about raising interest rates in September will largely depend on today's labor market report. If the increase in the number of employees exceeds 200 thousand and the unemployment rate will remain unchanged or fall, expectations about rate hikes in the next month will increase, causing a full-scale dollar strenghtening, wich would bring USD/JPY at the highest level for the month. If the figures are quite high, USD/JPY could even reach 105. However, if the report disappoint, the dollar can meet a nasty correction after rising last month. Stronger than all the dollar would fall to the British pound and the New Zealand dollar - the two currencies, which showed particularly good results in the eve the publication of the report.

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