The USD rebounded after a series of unexpected fluctuations from the Fed and the White House.
The US dollar rose slightly at the start of the week after markets were shaken by poor jobs data, a Fed member resigned and President Trump unexpectedly fired his top statistics official.
USD recovers but long-term trend remains unclear
The USD Index inched up 0.1% to 98.77 after falling 1.3% on Friday.
The US dollar rebounded slightly on August 5 after suffering a sharp decline last weekend due to a series of shocking events: a disappointing jobs report, the unexpected departure of a Federal Reserve Governor, and President Donald Trump's move to fire the head of the Bureau of Labor Statistics (BLS).
These fluctuations have led investors to increase their expectations that the Fed will soon cut interest rates. However, analysts warn that the recovery of the USD may only be temporary in the context of the US economy starting to show signs of weakness and the continued inconsistent management policy.
US labor market "out of breath"
Data released on August 2 showed that US job growth in July was lower than expected. Notably, the figures for the previous two months were revised down by 258,000 jobs, showing a clear deterioration in the health of the labor market.
Juan Perez, Director of Trading at Monex USA, said the US economy is slowing down in many areas, especially industries affected by the trend of shifting production abroad.
In the trading session on August 5, the USD increased slightly against the euro, Swiss franc and commodity currencies such as the Australian and New Zealand dollars.
The euro fell 0.1% to $1.1576.
The Swiss franc lost 0.5% to $0.8078, amid the Trump administration's threat to impose higher tariffs on Switzerland.
The Australian and New Zealand dollars fell 0.2% and 0.3% to $0.6463 and $0.5904 respectively.
Against the Japanese yen, the USD rose 0.3% to 146.945 JPY.
Politics continues to cast a shadow over the market
President Trump abruptly fired BLS Commissioner Erika McEntarfer on Friday, accusing her of falsifying employment data. On the same day, Fed Governor Adriana Kugler resigned, paving the way for Trump to quickly appoint new personnel to the Fed.
Investors see this as an opportunity for Mr. Trump to shape monetary policy in the direction of "easing to promote inflation", in the context that he has repeatedly criticized the Fed for not lowering interest rates quickly enough.
The US President said he will soon announce two replacements for the BLS and the Fed in the next few days.
Interest rate markets react strongly
The yield on the 2-year Treasury note fell to a three-month low of 3.659% amid the prospect of a rate cut in September. The yield on the 10-year note also hovered around a one-month low of 4.2257%.
According to CME FedWatch, the probability of a 25 basis point rate cut in September is now at 84%. The market is also forecasting nearly 60 basis points of rate cuts between now and the end of the year, which equates to two certain cuts and a 40% chance of a third.
Domestic USD exchange rate August 5
On the morning of August 5, the State Bank announced the central exchange rate at 25,240 VND/USD, down 9 VND compared to yesterday.
At the State Bank of Vietnam, the listed reference exchange rate was VND24,028 for buying and VND26,452 for selling, up from the previous day.
In the commercial banking system, the USD price tends to decrease.
Specifically, Vietcombank quoted the buying price at 25,980 VND and the selling price at 26,370 VND, down 10 VND. At BIDV, the corresponding prices were 26,001 VND and 26,361 VND. VietinBank traded at 25,870 - 26,380 VND/USD.
