Dollar sustains heavy losses across the board ahead of the NFP report

General market theme
Volatility in the financial markets has picked up over the past 24 hours ahead of today’s Non-Farm Payrolls report which we have mentioned time after time is considered to be the most market-moving event of the Forex universe. To add to that, this employment report is considered extra important as investors and traders are keen to find out how the labor market is faring in order to assess whether the Fed could continue with their rate hike agenda or back off for now. Unfortunately for the Dollar the bias is against it which means that a soft reading will drive investors away from the US currency while a strong reading will most likely be treated with doubt as market participants haven’t been excited from the recent US reports.

Price action highlights
To go into a little bit more detail on the above the way the Euro and the Cable traded yesterday in a strong hint on how investors are bracing to tackle the NFP report today as both currencies rallied to the upside. Starting with the Euro, the Single currency saw strong gains rallying from the 1.0880 area to the 1.0950 level on the back of better than expected reports from the Euro area but also it is clear that investors didn’t want to be holding too many Dollars in their hands ahead of today’s report. Should this rally continue to the upside the medium-term target lies at the 1.1050 level.

A similar rally was seen on the Cable yesterday that has been on the rise this whole week and the really interesting thing here is that the UK currency is rallying higher even though all three PMI reports printed lower than expected and the threat of Brexit hasn’t eased at all. This defiance of the UK currency against the Dollar is hinting us on the possibility that investors are not in fact buying Pounds but simply selling Dollars which again casts doubts on the US currency’s outlook. The Pound has reached the 1.4200 level yesterday and a further continuation will see the 1.4400 area as the next stop over the medium-term.

Focus of the day
It is clear that today all the focus and attention will be on the Non-Farm Payrolls report and the rest of the labor-related data that will be released. The number of people added in the workforce is not the only thing that interests traders but the wage growth rate is also of increased importance so we need to keep a close eye on it too. Earlier in the day there are a couple of Euro-related reports but they will play little role in dictating price action.