USD: reasons to strengthen but dollar stays muted following ongoing Trump concerns

The dollar rallied yesterday after a report showed the US economy created more private sector jobs than expected in May, bolstering expectations for an interest rate hike this month. The private sector employment report showed employers added 253,000 jobs last month.

Later in the day, the pound inched lower against the dollar, with forecast-beating manufacturing data giving the currency only a minimal boost as traders eyed radically conflicting polls on next week’s UK elections.

Today is a very busy day on the US data front as the week has been truncated so we have non-farm payroll figures, average earning data and the trade balance figures released.

Overall, any dollar strength remains tapered after waning expectations for sweeping tax cuts and the chances of several rate rises from the Federal Reserve reducing. Growing political tension over Trump’s presidency has raised worries of delays in the US administration’s efforts to implement sweeping tax cuts, and has kept the dollar pegged back.

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