Last week proved to be a very strong week for the US dollar in terms of data. Growth in both the manufacturing and services Purchasing Managers’ Indices (PMIs) contributed to strength seen at the start of the week. But the biggest gains were seen on Friday, with much better than expected non-farm employment data reporting 321,000 new jobs created, compared to an expected figure of 231,000. This is an astronomical figure for the US, and the highest it has been since June 2010. This highlights that the US economy is moving in the right direction in creating new jobs which will help the US economy grow in 2015. We saw the US dollar gain on Friday a cent against sterling, as well as a cent against the euro.
The employment data coupled with increasing average earnings figures also increases the likelihood of an interest rate hike in 2015.
A quieter start of the week is expected from the US. We will look forward to core US retail sales out on Thursday, which has been a unpredictable figure in the past few months. Also released will be the weekly unemployment claims data, which is typically used more as an indicator of how the non-farm payroll data trends. We also have inflation and consumer sentiment data out on Friday.