Friday’s very weak Non-Farm Payroll figures will put downward pressure on the US dollar. Weak US data means that the US dollar is likely to fall in value. With weak global growth and especially concerns about China, the US economy is demonstrating that it is not immune to problems outside America. With the US economy not as strong as previously expected, a rate rise is unlikely in 2015. With no US rate rise now likely until the early part of 2016, the Euro, Sterling, Swiss Franc and Yen should benefit.
The US currency’s downside should have limits as central banks in the Eurozone and Japan want to see continued weakness in their currencies to boost growth and inflation. Therefore, near-term dollar weakness against the Euro and Yen will prompt further easing measures by the European Central Bank and Bank of Japan in the coming months to cap their currencies gain.
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