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.

 

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