U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration/File Photo/File Photo Acquire Licensing Rights
A look at the day ahead in U.S. and global markets from Mike Dolan
August global business soundings continue to make a grating noise in Europe and China while disinflation hopes have been sideswiped by a rebounding oil price – leaving the U.S. dollar to surge anew.
The dollar’s index against the most traded currencies (.DXY) hit its highest level since May on Tuesday – just as U.S. markets return from the long Labor Day weekend, still digesting Friday’s benign employment report of brisk job creation, rising workforce participation and cooling wage growth.
The recent backup in oil prices – which has seen disinflationary year-on-year declines shrink to less than 10% from as much as 40% in June – continues to irk the back end of bond markets and will keep central banks on their toes.
But the U.S. jobs picture underscores the “soft-landing” consensus – something Tuesday’s updates on global business surveys from last month suggest may not be the case elsewhere.
The dollar’s latest jump was spurred on Tuesday by news of another swoon in Chinese service sector growth to eight-month lows last month, dousing Monday’s optimism about a tentative recovery in a sister survey on manufacturing.
Even though messy workouts of China’s ongoing property bust were some relief – as real estate giant Country Garden made some last minute dollar bond…
