USD: Will you support the non -agricultural payroll report the expectations of fed cuts? – MUFG

The main change rates have remained relatively stable during the night, after the modest rebound of the American dollar last week. This put an end to a streak of four consecutive weekly falls for the dollar index, which has returned to the level of 100.00 after reaching a minimum of the year of 97,921 on April 25, says Lee Hardman, MUFG FX analyst.

The US dollar is stabilized after recent falls

“The US dollar received some support last week for the growing optimism of investors that President Trump could further reverse the disruptive commercial policies that he has implemented during his second term in the coming months, including the significant reduction of the current” unsustainable “tariff rate of 145% applied to imports from China. At the same time, President Trump made clear To the president of the FED, Powell, which has helped restore the necessary confidence in the formulation of policies in the USA after the great blow to the trust that has taken place during most of this month, initially triggered by the announcement of tariffs of the ‘Liberation Day’ on April 2. “

: The improvement in the confidence of investors in the formulation of policies in the US was also evident in the performance of last week of the US bonds and shares markets. The S&P 500 shares index continued to bouncing and has now reversed most of the losses initially suffered after the announcement of tariffs on the ‘Day of Liberation’, when it fell almost 15%. Similarly, the US bond market has been bouncing since US yields reached a maximum of April 9. The yield of the US treasure bonds has fallen to 4.70%, moving below the maximum of the year of 5.02%. However, we still are convinced that the change of policy announced so far is sufficient to trigger a sustained rebound for the US dollar, with current tariff rates even being greatly disruptive to global trade and the US economy. “

“The moderate comments of the FED officials at the end of last week indicated that they are ready to lower the rates if the downward risks are materialized for growth. The governor of the Fed, Waller, declared:” I would not surprise me that you begin to see more dismissals, an increase in the unemployment rate in the future if the large tariffs, in particular, return. If I see a significant fall in the labor market, then the side of the use of the mandate, I think it is important that we intervene. “However, it does not expect tariffs to have a significant impact on the US economy before July, pointing out that it currently prefers to wait until the September FOMC meeting before starting to cut rates, unless the labor market weakens faster than expected.”