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Trump criticises Fed, US-Chinese deal appears in sight

Powell suggests there is more slack in the US labour market ahead of the release of unemployment data this week.

Centtrip: US, China agree talks date for October

President Donald Trump said on Saturday that the US dollar is too strong and described Federal Reserve Chair Jerome Powell as someone who “likes raising interest rates.”

During a speech at the Conservative Political Action Conference in Maryland, Trump said that the US economy was doing well despite the Fed’s actions and that he wanted “a Dollar that does great for our country, but not a Dollar that’s so strong that it makes it prohibitive for us to do business with other nations and take their business”.

Markets started the week with an optimistic tone following reports China and the US were close to reaching a trade deal. Beijing offered to lower tariffs and other restrictions on US agricultural, chemical, automotive and other products, while Washington is considering removing most, if not all, sanctions levied against Chinese products since last year.

However, there are still hurdles to overcome as each side faces possible resistance at home that the terms are too favourable to the other side.

Investors will be following a swathe of economic data this coming week, including retail earnings, central bank developments and the booming US labour market, with economists predicting 180,000 new jobs and an unemployment rate of 3.9 per cent. The US added 304,000 jobs in January, while the unemployment rate stood at 4 per cent, helping ease concerns over the impact of a partial government shutdown and slower economic growth.

Wage data will be of particular interest amid a period of muted inflation. Average hourly earnings in January were up just 0.1 per cent compared with the previous month – the weakest since October 2017.

European Central Bank (ECB) President Mario Draghi will update on the monetary policy this Thursday. The ECB is expected to hold rates steady amid a deceleration in regional growth and tepid inflation numbers. Investors are also watching the ECB for economic forecasts and news on long-term loans to banks.

The Reserve Bank of Australia and the Bank of Canada are also due to announce their own rate decisions this week. In addition, the Bank of England will release the minutes from its latest policy meeting.

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