Workers’ pay reveals fragility of dollar bulls

Today's employment cost index, which has historically been a low key data, just added heavy volatility in the market and revealed how fragile dollar bulls have become.

Dollar bulls are clearly not having their best times since March this year after ground breaking performance from summer last year.

As of now it seems like the wait for better wage growth is likely to get longer.

• Wages and salaries for US workers rose by the smallest amount for a quarter since 1982, which poses doubts over the recovery.

• US employment costs increased 0.2 per cent in the second quarter from the first quarter. The figure was well short of 0.6% expectations.

Wages actually rose by 0.7% in the first quarter, when economy shrank by -0.2%.

Dollar has taken a sharp beating against majors.

• Euro is currently trading at 1.106, up from 1.097 before the release.
• Pound is up more than 100 pips from 1.566 after the release.
• Yen gained more than 50 pips.

FXCM US dollar index is currently trading at 11988, close to key support. Dollar would fall sharply if key support gets broken 11980.