Australian Dollar gains against US Dollar ahead of US NFP data

The Australian Dollar jumps to near 0.7240 against the US Dollar ahead of the US NFP data.
The Fed is expected to keep interest rates at their current levels by the year-end.
US-Iran ceasefire continuation keeps broader risk rally upbeat.

Sagar Dua FXStreet

The Australian Dollar (AUD) trades 0.4% higher against the US Dollar (USD) at around 0.7240 during the European trading session on Friday. The Aussie pair reflects strength as the US Dollar underperforms ahead of the United States (US) Nonfarm Payrolls (NFP) data for April, which will be published at 12:30 GMT.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the New Zealand Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.39%	-0.44%	-0.16%	-0.13%	-0.40%	-0.47%	-0.33%
EUR	0.39%		-0.08%	0.22%	0.23%	-0.02%	-0.05%	0.07%
GBP	0.44%	0.08%		0.32%	0.32%	0.05%	0.03%	0.14%
JPY	0.16%	-0.22%	-0.32%		0.02%	-0.26%	-0.30%	-0.17%
CAD	0.13%	-0.23%	-0.32%	-0.02%		-0.29%	-0.32%	-0.20%
AUD	0.40%	0.02%	-0.05%	0.26%	0.29%		-0.03%	0.11%
NZD	0.47%	0.05%	-0.03%	0.30%	0.32%	0.03%		0.12%
CHF	0.33%	-0.07%	-0.14%	0.17%	0.20%	-0.11%	-0.12%

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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is down 0.35% to near 97.90.

Investors will pay close attention to the US NFP data to get fresh cues on the Federal Reserve’s (Fed) monetary policy outlook. According to the CME FedWatch tool, there is a 72% chance that the Fed will hold interest rates at their current levels by the year-end.

The US NFP report is expected to show that employers hired 62K fresh workers, significantly lower than 178K in March. The Unemployment Rate is seen as steady at 4.3%. Average Hourly Earnings, a key measure of wage growth, is estimated to have grown at a stronger pace of 3.8% Year-on-Year (YoY) against the previous reading of 3.5%.

Signs of strong job growth would weigh on bets supporting interest rate cuts by the Fed in the near term. On the contrary, soft numbers would boost them.

On the geopolitical front, the continuation of the ceasefire between the US and Iran is keeping the broader risk rally intact. S&P 500 futures are up 0.45% to near 7,370 in the European trade, indicating strong appetite for riskier assets.

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.

Why it matters to traders?

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.

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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