04.03.2019: Good idea to buy USD? (USD, DJIA)
The US dollar opened the trading week on a positive note.
On Friday, the US currency rallied across the board as investors gained confidence on hopes that the US and China are firm on the path to the soonest trade deal. The US dollar index which measures strength of the greenback against the basket of major currencies climbed to the level of 96.60.
Investors welcomed the news that the US and China are ready to extend a truce. Donald Trump decided to delay a deadline for new tariffs on Chinese imports in exchange for cancellation of China’s tariffs on US agricultural imports. Moreover, China has reportedly agreed to expand US imports worth over a trillion dollars over the next six years. However, it is still unclear whether the parties confirmed such a compromise. Nevertheless, the market cheers regular trade discussions of the negotiators.
The elevated mood of market participants was not spoiled even by a new portion of criticism of the Federal Reserve from Donald Trump. The President accused the central bank of inflating the US dollar’s value that deals a blow to the US economy and competitiveness of American exports and services in the foreign market.
On the other hand, US stocks received a boost from optimism about the progress in the trade talks and Trump’s critical comments. The Dow Jones Industrial Average is consolidating at near 26,116 points, not far from the five-month high and historical record.
Experts warn that on Friday the US Labor Department will release nonfarm payrolls. The employment data is likely to be weak. However, a positive change in average hourly earnings could prop up the market optimism on the US dollar. If the forecast does not come true, the US dollar could reverse a trend. Meanwhile, dollar bulls are keen to buy the greenback.
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