The US dollar’s advance stalled through trade on Thursday as investors appeared to take stock of Wednesday’s push through key technical resistance handles, and consolidated positions ahead of Friday’s jobs report. Having driven through 11-month highs, the dollar moved marginally lower as markets evaluated the impact of a route on global government bonds amid speculation and uncertainty across emerging markets, Europe and China.
More generally, the USD dollar continues to outperform as strong domestic growth and a hawkish central bank paint a positive picture moving through the latter half of 2018 and onward into 2019, a stark contrast to broader global uncertainty and measured macroeconomic policy outlooks. While an argument can be made for a widespread USD correction, the strains of emerging markets should continue to fuel demand for the greenback while the potential burgeoning gap in central bank interest rates ensures the dollar remains an attractive carry option.
Attentions now turn to todays’ jobs and wage growth print. Particular focus will be afforded to the Average Hourly Earnings report for a broader inflationary outlook. It will be critical in guiding short-term direction.