News and Analysis

Dollar Underpinned By Upbeat Economic Data

The greenback remained on the front foot in early trading on Monday, after Friday’s better than expected US employment report. Meanwhile, the United States topped 5 million coronavirus cases, representing a quarter of the world’s total. Investors eye a round of trade talks between Washington and Beijing at the end of the week.

The Bureau of Labor Statistics reported on Friday that the US economy added 1.8 million jobs in July and the unemployment rate fell to 10.2%, beating analyst expectations. Since February, unemployment has soared from a roughly 50-year-low of 3.5%.

Nobel laureate Paul Krugman put the figures in perspective, tweeting: “Better job report than expected, but: not great considering the hole we’re in, some screwy issues involving seasonal adjustment, and it’s a snapshot from July 12 or so, before most reclosing. This is not the V you’re looking for.”

According to Johns Hopkins University data coronavirus cases in the US have risen to 5,045,564 with 162,938 deaths. Five states represent over 40% of US infections: California, Florida, Texas, New York and Georgia. Last week Tedros Adhanom Ghebreyesus, the head of the World Health Organization (WHO), suggested that a vaccine may never be found. At a news briefing he told reporters that there is “no silver bullet at the moment – and there might never be”.

US/China tensions remain elevated after President Trump issued executive orders set to ban American use of WeChat and TikTok, taking effect from the middle of September. Additionally, the US imposed a fresh round of sanctions on 11 individuals, including Hong Kong’s chief executive Carrie Lam. The US dollar typically benefits from its safe haven appeal during periods of Sino/US discord.