The trade war is back and investors donít like it. The U.S. dollar traded higher against all of the major currencies Friday on the back of a stronger jobs report and President Trumpís threat of fresh tariffs on China and Japan. Stocks extended their slide and unless the president retracts his threats, further losses are likely, which means more risk aversion and losses for the major currencies. Fridayís nonfarm payrolls report guarantees a Fed hike on September 26. Not only were there more than 200K jobs created in August but, wages are growing! Average hourly earnings rose 0.4% last month, the strongest pace of growth in nearly a year. Between the record highs in U.S. stocks last month and the pickup in earnings, next weekís retail sales could surprise to the upside as well. Comments from U.S. policymakers have also been hawkish with Fed Presidents Mester, Rosengren and Kaplan looking for the policy rate to move toward neutral.
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