Today market analysis on behalf of Bas Kooijman is the CEO and Asset Manager of DHF Capital S.A
The dollar steadied on Tuesday after declines in the past two sessions. Markets could remain exposed to the downside on concerns about declining appetite for dollar-denominated assets. Reports that Chinese financial institutions could curb exposure to US treasuries affected sentiment. While this does not signal an outright retreat from US assets, it could fuel some caution.
Attention now shifts back to US data, which could help re-anchor expectations around Federal Reserve monetary policy. Later today, the ADP weekly employment report is due, following a modest gain of 7.75k in the previous release. In an environment where the resilience of the labor market is increasingly being questioned, any downside surprise could heighten caution ahead of Wednesday’s nonfarm payrolls report and pressure both the dollar and treasury yields.
Recent comments from Director of the National Economic Council Kevin Hassett added to this cautious backdrop, as he warned that job growth may slow in the coming months.
US retail sales data will also be released, with growth expected to slow to 0.4% from 0.6%. Evidence of softer consumer momentum would add to concerns that domestic demand is losing traction, reinforcing expectations of monetary policy easing later this year and weighing on the dollar.
Zaid Barem / ymm
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