The increase in US JOLTS data to the highest level in history, was unable to boost the lackluster US Dollar amid the latest US-China trade negotiation process. Data on US Job Openings and Labor Turnover Summary (JOLTS) in December 2018 rose to 7,335 million, the highest level in history. The yield was higher compared to the previous month's figure, which had just been revised up to 7,166 million. This JOLTS number also outperformed market expectations which predicted an increase of only 6.9 million. If described, the opening level of US employment that contributes the most increase is the construction sector, with an increase of 88,000.
US Dollar Index Also Declines
Considering that the JOLTS indicator is a medium impact economic data, there is a possibility that the decline in the US Dollar tonight will be due to the latest developments in US-China trade negotiations, which have not yet reached an agreement on a trade war cease will end on March 1. The US Job Openings and Labor Turnover Summary (JOLTS) data measures the number of new jobs outside the agricultural sector for a month. Although released a month later than the change in the number of workers (Non-Farm Payrolls), but this data is quite important, because it indirectly becomes the initial indicator that describes the overall US employment conditions.
US Dollar Slows at Highest Level Two Weeks
The US Dollar Index (DXY) moved in a limited range due to the lack of release of data having a large impact, while market risk appetite slumped. At the beginning of the European session on Friday (8/February), the US Dollar Index (DXY) moved sideways around 96.58, the highest level in the past two weeks. Meanwhile, amid the absence of today's economic data release schedule, market risk appetite slumped and demand for Safe Haven assets increased due to rising concerns about projections for world economic growth, as well as the continuation of US-China trade negotiations.
Economic Slowdown in The European Union
On Thursday, the European Commission released its latest economic projections after revising Eurozone growth and inflation expectations in 2018 to 2020. Due to trade conflicts and various domestic challenges, inflation is expected to last longer than the 2 percent target set by the European Central Bank (ECB). As a unity of 28 countries, the European Union is one of the world's largest economies with the US and China. As a result, these concerns plunged the Euro and other high-denominated currencies, while boosting the US Dollar which is its main rival and doubles as a Safe Haven.
The weak projection of Eurozone inflation will force the ECB to maintain a looser monetary policy for longer. On the other hand, the Reserve Bank of Australia (RBA), the Reserve Bank of New Zealand (RBNZ), and the Bank of Canada (BoC) have also made comments that were more dovish in the past two months.The Bank of England (BoE) could not make a policy change before Brexit uncertainty found a bright spot. The Bank of Japan (BoJ) has also not gotten a way out of prolonged accommodative monetary policy. In comparison, the Federal Reserve does signal that it will stop the cycle of interest rate increases for the time being.
However, they have stopped monetary stimulus and, if economic conditions permit, can resume interest rate increases at any time. Viewed from this perspective, it is understandable why the US Dollar projection is considered "difficult to bear" in the short term, although the Initial Jobless Claims data last night was rather disappointing. If you are looking for forex learning news like this, you can go to Didimax. Didimax is a platform where you can learn forex through free online classes.
