Forex Today: US jobs report to keep volatility going ahead of weekend

Here is what you need to know on Friday, February 2:

The US Dollar (USD) came under heavy selling pressure and the USD Index declined nearly 0.5% amid falling US bond yields in the American session on Thursday. Markets stay relatively calm early Friday as focus shifts to the US January jobs report, which will feature Nonfarm Payrolls and wage inflation figures. The University of Michigan will release a revision to January Consumer Sentiment Index data and the Census Bureau will publish Factory Orders for December.

NFP Preview: Forecasts from 10 major banks, new year, same old labor market.

Following the uninspiring employment-related data on Thursday, the benchmark 10-year US T-bond yield dropped to its lowest level since late December below 3.9%. Weekly Initial Jobless Claims came in higher than the market expectation for the week ending January 27 and the Employment Index of the ISM Manufacturing PMI survey edged lower to 47.1 in January from 47.5 in December.

Nonfarm Pyarolls in the US are forecast to rise by 180,000 in January. The Unemployment Rate is expected to tick up to 3.8% and the Average Hourly Earnings are seen rising 0.3% on a monthly basis. 

NFP Forecast: US Nonfarm Payrolls expected to increase moderately in January.

The Bank of England (BoE) left the bank rate unchanged at 5.25% as expected and revised inflation projection for 2024 lower. In the post-meeting press conference, BoE Governor Andrew Bailey refrained from commenting on the possible timing of a policy pivot. Although the initial reaction caused GBP/USD to edge lower, the pair benefited from renewed USD weakness and closed the day in positive territory above 1.2700 on Thursday. Early Friday, the pair trades in a tight range at around 1.2750.

USD/JPY pushed lower and registered losses for the second consecutive day on Thursday. The pair holds steady at around 146.50 in the European morning on Friday.

After touching its lowest level in nearly 7 weeks at 1.0780, EUR/USD reversed its direction and climbed above 1.0850. The pair continues to stretch higher toward 1.0900 in the early European session.

Gold gathered bullish momentum in the second half of the day on Thursday and climbed to its highest level since early January above $2,060. XAU/USD stays in a consolidation phase slightly below $2,060 ahead of US jobs report.