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Forex Today: US Dollar extends pullback as markets await key jobs data
Here is what you need to know on Friday, May 3:
The US Dollar (USD) stays under modest bearish pressure early Friday, with the USD Index (DXY) trading at its lowest level in three weeks, slightly above 105.00. In the second half of the day, the US Bureau of Labor Statistics will release April jobs report, which will include Nonfarm Payrolls, Unemployment Rate and wage inflation figures. The ISM Services PMI report for April will also be featured in the US economic docket ahead of the weekend.
After the decline seen following the Federal Reserve's (Fed) policy announcements late Wednesday, the DXY recovered modestly during the European trading hours on Thursday. The positive shift seen in risk sentiment, however, triggered another leg lower later in the American session. Wall Street's main indexes registered strong gains, with the Nasdaq Composite leading the winners with a 1.3% increase. Early Friday, US stock index futures trade in positive territory, while the 10-year US yield stays below 4.6%.
US Dollar price this week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.24% | -0.30% | 0.07% | -0.52% | -3.33% | -0.34% | -0.61% | |
| EUR | 0.24% | -0.06% | 0.31% | -0.27% | -3.09% | -0.09% | -0.37% | |
| GBP | 0.31% | 0.06% | 0.37% | -0.22% | -3.03% | -0.04% | -0.30% | |
| CAD | -0.07% | -0.32% | -0.37% | -0.59% | -3.41% | -0.41% | -0.70% | |
| AUD | 0.51% | 0.27% | 0.21% | 0.58% | -2.81% | 0.17% | -0.10% | |
| JPY | 3.24% | 2.99% | 2.93% | 3.30% | 2.71% | 2.90% | 2.65% | |
| NZD | 0.34% | 0.09% | 0.03% | 0.41% | -0.18% | -3.00% | -0.27% | |
| CHF | 0.62% | 0.38% | 0.31% | 0.68% | 0.09% | -2.71% | 0.27% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Nonfarm Payrolls (NFP) are forecast to rise 238,000 in April following the 303,000 growth recorded in March. The Unemployment Rate is expected to hold steady at 3.8% and the Average Hourly Earnings are seen rising 4% on a yearly basis.
NFP Forecast: Nonfarm Payrolls set for another solid increase in April, albeit cooling from March.
EUR/USD registered marginal gains on Thursday and continued to stretch higher early Friday. At the time of press, the pair was trading slightly above 1.0730.
After spending a large portion of the day below 1.2500, GBP/USD reversed its direction in the American session and closed in positive territory. The pair holds its ground in the European morning and trades modestly higher on the day near 1.2550.
Following Wednesday's sharp decline, which was seemingly caused by a Japanese intervention in the foreign exchange market, USD/JPY extended its slide in closed in negative territory on Thursday. The pair stays on the back foot early Friday and was last seen losing 0.4% on the day near 153.00.
Japanese Yen sticks to gains near near multi-week top, looks to US NFP for fresh impetus.
Gold failed to build on Wednesday's gains but managed to close the day slightly above $2,300 on Thursday. XAU/USD stays relatively quiet near this level in the European morning.
Gold price consolidates around $2,300 as traders remain on sidelines ahead of US NFP.
Economic Indicator
Nonfarm Payrolls
The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.
Read more.Last release: Fri Apr 05, 2024 12:30
Frequency: Monthly
Actual: 303K
Consensus: 200K
Previous: 275K
Source: US Bureau of Labor Statistics
America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.
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