US dollar, DX_F, -0.05% edged lower Tuesday, weighed down by broader economic uncertainty and geopolitical uncertainty. Analysts largely predict a continued slowdown in job creation. Out Wednesday will be the May ADP employment change numbers. This report is an extremely important submission to the scorecard that helps us to judge the health of the labor market. Economists expect nonfarm payrolls to increase by about 130,000 in the next report.
When Thursday rolls around, the weekly jobless claims figures will paint an even clearer picture of the employment state of our union. Given the current state of our climate, one wonders how long the US dollar will remain stable. Recently, it fell to its lowest level in six weeks against other major currencies. What’s behind this drop—fears over tariffs, chaotic swing in the bond market, even bad economic data.
Earlier this month, a US court temporarily blocked President Trump’s reciprocal tariffs. This decision is on top of many other positive economic indicators. This ruling will prevent the White House from imposing sectoral import levies. It is a reminder of continued trade tussles. Industries such as pharmaceuticals, electronics, and airlines may soon face new tariffs, heightening concerns among investors regarding potential market impacts.
To the administration’s credit, they have placed the blame squarely on China for not living up to their end of the trade deal. He responded to assumed violations by increasing US tariffs on steel and aluminum to 50%. The dollar’s volatility has been exacerbated by aggressive trade measures. Markets are adjusting to what all of this means for domestic and international trade as tariffs continue to skyrocket.
Despite these challenges, recent data from the Job Openings and Labor Turnover Survey (JOLTS) showed resilience in the US labor market. Job openings jumped up to a record 7.391 million in April, well above forecasts which had predicted a drop to 7.1 million. This surprise leap can be seen as some cause for optimism about the nation’s job growth in the months ahead.
With market participants looking ahead to the upcoming employment figures, analysts will be keeping an eye on changes in mood toward the dollar. Domestic economic indicators and global trade policies will be critical determinants of the currency’s path going forward. Through at least the near term, their interplay will be of utmost importance.