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US Dollar Higher on $1.2 Trillion Infrastructure Bill

The US infrastructure Bill for $1.2 Trillion gains support from Republicans. The US Dollar Index rallied 0.54% on Friday, August 6, on Bill expectations.

The US Dollar saw a sharp spike on Friday on expectations of the passing of the $1.2 trillion bill. The infrastructure bill passed over the weekend is a key win for US President Joe Biden. The labour market shows improvement, as the unemployment rate dropped to 5.4% in July. The US Dollar in the foreign exchange market has gone up with positive sentiment driving the greenback higher.

The US Dollar closed at 92.80 on Friday, August 6. The greenback shot up 0.54% on Friday. The US Dollar Index is trading above the 200 SMA at 91.30 levels, with an upward trajectory in the foreign exchange market.

The USD was languishing below the 92.00 levels in the previous week. The US Dollar Index saw a gradual decline to 91.80 levels last week. But a sharp spurt brought the current exchange rate of the USD to move above the 92.00 levels.

US Dollar at 92.80 on Infrastructure Bill Expectation
US Dollar at 92.80 on Infrastructure Bill Expectation

US Infrastructure Bill Lifts US Dollar to 92.80 Levels

The huge infrastructure bill won the support of Republicans over the weekend. The bill will help to upgrade highways, bridges, and roads in the United States. The bill has to pass through another step before the final vote. The infrastructure work will bring in new jobs and improve consumer spending.

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Expectations of the Republican vote for the infrastructure bill brought the Dollar higher by 0.54%. The bill has another hurdle to pass, but the US Dollar Index saw an upwards move in the foreign currency exchange on the positive news.

It will provide substantial resources for spending on the repair and upgrading of roads and physical infrastructure. It would be the highest investment in the infrastructure sector in decades, say authorities. Earlier, a $1.9 trillion stimulus helped to support people with coronavirus aid to handle the pandemic. People who lost jobs and families gained support from the stimulus package.

The infrastructure bill will be a huge success for Democrats. The US Dollar will move higher from this level, say experts.

Unemployment Rate Contracts

US Unemployment Rate has come down from 5.9% to 5.4% in July, along with an increase in wages. Average hourly earnings have come up to 4.0%, though expectations were at 3.85.

Unemployment Claims have come down from 399k to 385 k. There is good job growth in the country, especially in the leisure and hospitality sector. The Labor Department states that the job sector in July has shown good performance. Leisure and traveling show a surge in hiring, and job opportunities in these sectors are high.

Upbeat employment data will bring in monetary policy tightening next year. Economic activity and good job market data show a rebound after the coronavirus recession. The labour market and inflation are key factors that will bring changes to monetary policies by the Fed.

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Non-Farm Employment Change has gone up from 938k to 943k. The increase is due to better job opportunities in the US in July. The economy is progressing towards the pre-pandemic levels, and the central bank is showing good progress. Good NFP reports brought a positive move to the USD.

However, companies state that workers are difficult to find. Applicants are willing to stay at home as they get money provided by the government. Staying unemployed brings them good revenue.  Janel Yellen, the US Treasury Secretary, says that the percentage of American women in the labor force has come down in the country.

Trade Balance has widened from 071.0B to -75.7B. Final Services PMI remains at almost the same level at 59.9. Factory Orders m/m has come down from 2.3% to 1.5%

Construction Spending m/m, which was at -0.2%, has improved to 0.1%.  ISM Manufacturing PMI has come down from 60.6 to 59.5. Good economic data has pulled the US Dollar above the 92.00 levels

The US Treasury bond yield has gone up with expectations of a policy tightening by the Federal Reserve. The US Federal Reserve Chief Jerome Powell has not given any hope for a tapering in the policy. But the central bank may hike rates by next year, expect analysts.

European Progress Remains Slow

The European Union shows very mild progress in economic activity. It is driving the Euro to Dollar today lower to 1.1760 levels. The euro converter shows weakness as macroeconomic figures in the Euro region show tepid progress.

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The British Pound to Dollar current exchange rate is trading at the lower end of the range between 1.3870 and 1.3950 levels. The Cable is trading without a clear direction in August.

The US Dollar to CAD exchange foreign currency exchange is at the 1.2552 levels, moving within a range between 1.2450 and 1.2560 levels.

Any change in the US Dollar reflects on other major currencies.

The Delta variant is a cause for worry as it spreads across various countries. The vaccination drive has to progress faster to keep conditions safe.

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