USD Outlook: Traders Brace For NFP Release
USD Softer Ahead of NFP
The US Dollar is softening today ahead of the latest US jobs report due this afternoon. The move is likely linked to the push lower we’re seeing in oil prices as traders react to news of the Israel/Lebanon ceasefire. One view is that now that one of Iran’s primary conditions for a deal with the US has been satisfied, talks might start up again though as yet there has been no news suggesting this is the case. On the data front, US readings have been stronger this week with better ISM, JOLTS and ADP figures all coming in above forecasts.
NFP On Watch
Focus now turns to the headline NFP release this afternoon. Despite the better data through the week, expectations are set a little lower today which also explains the pre-data softening in USD. On the headline NFP reading, the market is looking for 85k down from 115k prior with the unemployment rate set to hold steady at 4.3% and wages set to rise slightly to 0.3% from 0.2% prior. If seen, this data should do little to inspire a fresh move higher in USD today and will likely see USD remain pressured.
Fed Expectations
However, if we get an upside surprise today this could send USD firmly higher feeding into hawkish Fed expectations which have been in focus recently. Ahead of the data, market pricing for a hike by year end is currently around 50%, any increase in that pricing should see USD higher near-term. If, however, data undershoots forecasts today and we see a bigger-than-expected decline, this will likely see USD firmly lower into the weekend.
Technical Views
DXY
For now, the index remains above the 99.15 level after stalling and reversing around 99.50. If we break back below that level, focus turns to 98.24 as the deeper support to watch while to the topside, 100.36 is the key target to note.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.