Analysts Francis Cheung and Christopher Wong at OCBC Bank on Friday released a research note on the outlook for the US dollar’s movements following the release of US labor market data later in the day.
In this regard, analysts expected the US dollar to remain more vulnerable to the week’s data amid the US Federal Reserve’s shifting interest towards supporting the country’s labor market.
The U.S. dollar is expected to rise if the unemployment rate in August falls more than market expectations; also, the dollar could rise if U.S. private sector companies add more jobs than expected.
However, if the labor market report comes in weaker than market expectations, the dollar is likely to fall strongly as market concerns about a US labor market recession worsen and investors’ risk sentiment may deteriorate.
If the US labor market data is consistent with expectations, a soft fall scenario for the economy may become more likely, as there is nothing bad or good about the performance of the US economy in this case, and this perception is the least turbulent for the markets.
As a result, the dollar may be trading near its lows and therefore, the US stock market could find room to rise.
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