NEWS / Foreign Exchange

Global foreign exchange markets traded within a relatively tight range against the dollar

Global foreign exchange markets have been trading within a relatively tight range against the dollar since the surprisingly strong non-farm payroll release on Friday. Not only was job creation sharply above consensus (the actual 180K net new jobs sharply exceeded expected 130K net new jobs), but there were also upward revisions to February and January numbers. The drop in the unemployment rate from 4.5 percent to 4.4 percent was also a surprise as the market had expected an increase to 4.6 percent. This rosy employment pictured bolstered the greenback sharply on Friday morning, and the dollar has largely managed to hold onto those gains. The dollar index is even up slightly this morning from the close on Friday.

The employment data on Friday lower the probability of a Fed rate cut decision anytime soon. The U.S. inflation data out this week are not likely to change that picture. Import prices and producer price s are expected to have risen, as commodity prices (and especially energy prices) rebounded at the end of the winter. Stronger inflationary data could strengthen the dollar. Also watch the trade number this week. A dollar-neutral deficit would likely be around $60 billion. A smaller deficit would likely be better for the greenback.

This morning's economic data was light, and remains so for key economies throughout the day. The exception to this is the expected BOJ target rate announcement, which typically is announced in the early afternoon. Market expectations show the Bank of Japan keeping rates on hold at 0.50 percent.