US Forex News

Those who thought the US economy was slumping (including me) are wrong.  Or at least that’s what today’s information tells us.  The ISM survey for the month of June reported at 60.7, up from 59.7 in May.  The ADP Employer Report counted 150,000 new jobs this month.  That is a significant increase from the 100,000 new jobs expected this month.

What does all this mean for currency traders?  The job report is important with regard to interest rates.  A number under 100,000 would have been increased speculation for an interest rate cut.  The Non-Farm Payrolls Report is still scheduled for Friday, but today’s news suggests that growth picked up in the second quarter.  Some economists are even suggesting the likelihood of a 3% surge in the economy by the end of the year.

If the Fed does not have to worry about a slowdown in growth, then it can turn all of its attention towards inflation.  We have already seen the importance of curbing inflation on the decisions and comments of monetary policymakers.  Central banks around the world are maintaining hawkish stands in the face of growing worldwide energy prices.  Now that we’ve seen the Fed’s expectations of moderate growth being met, the US dollar should see a rush of support.  The greenback has been up today against both the pound and the euro.  Carry trades should also pick up (or at least continue) as interest rates all over are destined to remain high.