Is the dollar dive ending?
Outlook: Today the US releases include the April trade balance on goods and services, likely a less-bad number (if still horrendous), and JOLTS, which had hit a record high last month for openings. The FX market is in a wait-and-see mode, but it seems improbable it can persist for long, not with the ECB likely to say something on Thursday and US CPI also due that day. In the meanwhile, more talk about how jobs can be so plentiful but workers failing to show up to fill them. We continue to think the child-care issue is not getting enough attentionlast week one estimate said 3.8 million are staying home for that single reason. Last time JOLTS showed a rise in jobs by 597,000 m/m to 8.123 million, the highest level since the series began in December 2000 and well above market expectations of 7.5 million, according to Trading Economics. It can only be bigger this time. We await news of additional pay rises to counter the labor shortage. This is nice for personal consumption/retail sales but just wait, it will also trigger talk of wage-push inflation, too, something we havent heard about in donkeys years. The important part is pay raises for the lowest-paid, something the Fed is watching. The other inflation-pusher is commodity prices, many of which cannot recover fast due to past shortcomings in exploration and building infrastructure to extract. It may be true that some commodity prices can recover quickly, but not all. Supply issues can be a drag for more than a few months, and then consider oil, the linchpin. There is talk of $100 oil again. Oddly, the Fed will be loath to talk about inflation problems like this when they are busy saying its too soon to talk about tapering. On the surface, the crummy labor market data gives the Fed a dandy excuse to postpone taper talk at next weeks meeting, but its not clear the markets are still buying into it. Some were impressed (or appalled) when TreasSec Yellen said over the weekend that a return to normal rate pricing would be welcome, an innocent comment that got a ridiculous amount of attention. There is a groundswell of sentiment that the Fed should not be inactive for too long; the natives are getting restless. That suggests the dollar dive is ending, although it hardly suggests the dollar can or will rally. That can imply FX in narrow ranges for a couple of weeks on uncertainty about US rates. Geopolitical Tidbit: The EC president echoed the Biden phrase "America is back" ahead of Bidens trip to Europe. The trip encompasses G7 in the UK, NATO in Brussels, and Putin in Switzerland. Ahead of time, something we think is a Big DealPres Biden spoke with Ukraines Pres Zelensky and invited him to the White House in July. Recall that Trump trying to extort Zelensky was the cause of the first impeachment. Zelensky is the hero of that tale along with the handful of US officials who resisted and testified at the trial. We should give the guy a parade. This is an excerpt from The Rockefeller Morning Briefing, which is far larger (about 10 pages). The Briefing has been published every day for over 25 years and represents experienced analysis and insight. The report offers deep background and is not intended to guide FX trading. Rockefeller produces other reports (in spot and futures) for trading purposes. To get a two-week trial of the full reports plus traders advice for only $3.95. Click here!