US Dollar Weak as Disappointing NFP Report Raises Hopes For Stimulus
Arslan Butt • 1 min read
The US dollar is trading bearish at the start of a brand new trading week, amid rising expectations for more fiscal stimulus measures following the release of a weaker than expected NFP report in the previous session. At the time of writing, the US dollar index DXY is trading around 90.76.
On Monday, the US dollar continues to trade close to the weakest levelsqa1 in about two and a half years – a low it touched a few sessions back on the back of optimism surrounding progress in vaccine development. However, on Friday, it received another blow after the NFP report revealed an increase of only 245k jobs in November – the smallest rise seen since May.
New jobs added have grown at a slower pace due to the fresh wave of infections that have swept across the US, prompting states to impose fresh lockdowns and restrictions, further impacting the US economy and delaying the possibility of recovery. The disappointing report revealed signs of strain that the US economy is facing due to the pandemic, raising expectations that the government would have to roll out more stimulus.
US lawmakers from both parties seem to be getting ready to finalize stimulus measures worth $908 billion, which could pass as soon as this week. Additional stimulus measures to prop up the economy weakens investor confidence and drives the currency weaker, causing the dollar to exhibit signs of weakness for now.