The period of high volatility in the markets will continue

Strong Friday data on the number of new jobs in the US economy supported the dollar, but its growth was not as significant as it could have been earlier when the Fed persistently followed the way of tightening monetary policy.

According to the data presented, in January, the American economy received 304,000 new jobs against the revised downward December value of 222,000 and their growth forecast of 165,000. Growth in the private non-agricultural sector, which amounted to 296,000, also turned out to be significant. Employment rate from 3.9% to 4.0%, while in the manufacturing industry the number of jobs fell in growth to 13,000 against the already low December value of 22,000 and the forecast of 17,000.

Evaluating the published data, we believe that their positive is perhaps the residual phenomenon after the really strong growth of the economy and employment last year. American companies are still hiring a fairly large number of workers, but against the background of a marked slowdown in GDP growth, as well as a slowdown in the increase in production indicators, we should not consider, in our opinion, the positive dynamics of new job growth as the main indicator.

As a result of its last meeting, the Fed has already made it clear that it fears a slowdown in economic growth in the country and in the whole world, therefore the reaction in the foreign exchange market, as well as in the US stock market, has been rather restrained. And here, as we see it, the absence of an agreement on trade between Washington and Beijing, as promised earlier at the end of the January 30-31 meeting, which investors had been looking forward to since the end of last year, played an important role. D. Trump's statement that the final decision on trade will be made at a personal meeting between him and Xi Jinping, which will be held this month.

Observing how the events unfold, we believe that the importance of the negotiation process between China and the United States is more significant than labor market statistics or some other data, so we expect the period of high volatility and uncertainty in the financial markets to continue.

Forecast of the day:

The currency pair AUD / USD is below the level of 0.7235. The pair is negatively affected by the lack of certainty about the trade negotiations between the United States and China. We expect the continuation of the smooth decline of the pair to 0.7200 if it does not grow above the level of 0.7235.

The currency pair GBP / USD is trading below the level of 1.3085. Sterling is still ruled by Brexit, but the publication of weak production figures today may cause the price to continue to decline to 1.3000.

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