A run of soft US labour market data has left the dollar on track to end the week slightly lower against most major currencies, threatening to break the DXY index’s six-week winning streak despite a strong rebound in the wake of the ISM manufacturing survey and a hawkish speech from FOMC member Mester. Today’s non-farm payrolls report adds to the evidence that US labour market conditions are loosening and wage pressures abating. In our view, that reduces the chances of another rate hike from the FOMC this autumn (perma-hawk Mester’s comments notwithstanding). While a shift towards a less aggressive monetary stance threatens to remove one key support for the greenback, economic activity in the US still looks in robust shape – especially in comparison to most other major economies, where this week’s data generally continued the recent downward trend.
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