Today, US November payrolls came in much worse than expected at 155K compared to a forecasted 200K. Despite unemployment remaining low, this data confirms worries of a slow-down in US economic growth.
Following the data release, the Dollar index fell from 96.80 to 96.50 before recovering towards the end of the session. After a strong year for the Dollar, it’s obvious that economic growth is slowing down.
Regardless of the intermittent truce, trade war uncertainties still prevail and dovish comments from the Fed last month helped to cement the decrease in Dollar momentum in investor’s minds. Further, the inversion of the yield curve just a couple of days ago has brought real worries of a looming recession.
Having said this, Powell attempted to talk up the economy somewhat yesterday, pointing out that “the economy is performing well overall” which is still true (especially on the Forex side of things)- for now. One final rate hike is still expected this month to round off the year but overall, sentiment is shifting as the Fed is expected to gradually reduce the pace of rate hikes coming into 2019 in an attempt to contest runaway inflation.