Greenback bid ahead of payrolls

As we look ahead to the non-farm payrolls reading, the US dollar comes back into focus.

US Dollar
Source: Bloomberg

The USD is already seeing some positive momentum and if today’s data impresses, we’ll only see these gains extended. Unemployment claims dropped 16,000 to 297,000, coming in relatively in line with estimates. This spurred the greenback higher, as traders look ahead to today’s NFP. The market is expecting 230,000 jobs added which is a rise from the previous month’s 214,000. The unemployment rate is expected to remain steady at 5.8% and average hourly earnings up 0.2%, a slight improvement. Some analysts have gone as far as saying they expect the previous month’s jobs numbers to be revised higher as well. Any developments in average earnings have a bearing on inflation and therefore will be watched very closely. Apart from jobs, we also have trade balance data and Federal Reserve members Fischer and Mester speak. Dallas Fed President Fisher suggested the Fed is closer to raising rates than is generally expected and this played a role in the greenback’s strength.USD/JPY was the best performer in the FX space, topping ¥120.00 for the first time since 2007. The pair printed a high of ¥120.25 and has since pulled back to ¥119.72. While it is a tad overbought with the RSI at 74.47, there is absolutely no reason to sell an instrument in a screaming uptrend with bullish momentum. As a result I remain in favour of buying dips, potentially into the ¥119.00 region.


Click to enlarge

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

Find articles by analysts