Is it time for King Dollar to abdicate his throne? The highly anticipated Nonfarm Payrolls report for June, which is scheduled on July 2 and comes before of a long weekend, could provide other currencies an opportunity to push the greenback down. FXStreet analyst Yohay Elam points forth four reasons why June’s jobs report could be a negative for the dollar.
“The United States added 559,000 jobs in May, falling short of expectations once again. Some point to large unemployment benefits and stimulus cheques, while others point out that the covid problem is far from resolved, and some people are afraid to contact them again. The talent gap was exacerbated by a scarcity of basic supplies. Is it true that all of these problems were handled between May and June? Probably not, but expectations are still high. According to the economic calendar, 700,000 new jobs will be added in June, a significant rise above May’s hiring. All of this could lead to a third disappointment in a row.”
Given the inflated expectations established by Federal Reserve Chair Jerome Powell, a lower figure than economists predict would be much worse. Even a satisfactory figure would serve as a reminder that the 7.6 million jobs lost during the epidemic will take a long time to replace. This could have an impact on the value of the dollar.”
“Average Hourly Earnings increased by 0.5 percent in May and 0.7 percent in June, both above estimates.” Another upward surprise in pay, similar to the sluggish job increases, could happen for the third time. Wages, on the other hand, are more likely to decrease rather than accelerate while employment growth continues modest. If Americans have a little less money in their pockets, inflation pressures will be relieved, and the dollar will fall.”
“Investors appear to be hoarding their cash ahead of the crucial NFP report. A minor shortfall – or even the employment data meeting expectations – could be enough to send the market in the opposite direction. This indicates that the greenback is losing ground.”/n
