Monday 11 March 2019


Written by: Lukman Otunuga, FXTM Research Analyst
Traders are likely to be scratching their heads after the release of a very strange employment report from the United States for February.

The United States added only 20,000 jobs to its economy last month, which is a stunningly low figure but it has been joined by other data that paints a more encouraging picture. For example, hourly earnings on an annual level increased by 3.4% - which is an impressive number to cap off an odd economic release.
We wonder whether investors will digest the figure off the back of a disappointing retail sales release in the past couple of weeks as an indicator that the global economic slowdown narrative is sneaking its way into the world’s largest economy. The initial selling reaction in the Dollar Index just one day following a downbeat ECB alerted the Dollar divergence trade suggests as much.

This financial market is overall proving a very difficult one to play, but if we had to pick a side we would still favor the Greenback – in spite of this odd jobs report. The data from China this morning was concerning and suggests economic weakness in emerging markets in the months ahead; while the ECB has made no secret of the fact that the Eurozone is very much remaining in its place as the “weak link” in the developed economy. At the same time, Oil has dropped close to 3% as fears over slowing global growth remain high.

We prefer to maintain a negative view on global stock markets as concerns over slowing world economic momentum show no signs of deceleration, while we also do not want to touch the Pound with the Brexit clouds so thick in uncertainty with no one having any idea of what could, or could not happen, with the United Kingdom potentially crashing out of the European Union over the next couple of weeks.

There is no disputing the thick smoke of doom and gloom that is being painted across financial market headlines overall, and although indications of an economic slowdown are also being felt in the United States, the US economy does overall still appear to be in better shape than its global counterparts and the Dollar still looks supported in a very confused market.

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