Here is what you need to know on Friday, August 6:
Stocks, bond yields and the dollar are at elevated levels ahead of July's US Nonfarm Payrolls report, which carries high expectations. Wages are of interest amid rising inflation and the Fed's inching toward tapering. Canada's jobs report is also eyed, GBP/USD is holding up after the BOE, while gold and cryptos are on the back foot.
US stock indexes closed at or around record highs on Thursday amid optimism about US economic growth. The Nonfarm Payrolls report is set to show an increase of 870,000 jobs in July, similar to levels seen in June, but estimates vary more than usual. Leading indicators have been mixed.
Nonfarm Payrolls Preview: Why the dollar could surge in (almost) any scenario
US July Nonfarm Payrolls Preview: Analyzing major pairs' reaction to NFP surprises
The Unemployment Rate is set to fall from 5.9% to 5.7% and wages annual wage growth to advance from 3.6% to 3.8%. Investors are watching salaries more closely after the Federal Reserve Vice-Chair Richard Clarida said he sees inflation risks as being to the upside. He also supports a tapering announcement this year.
The Fed currently buys $120 billion worth of bonds every month and the question of reducing the program tops traders' agendas. Clarida's comments and similar remarks from other Fed officials are driving bond yields higher, and that is supporting the dollar. EUR/USD is hovering below 1.1830, around the lows.
The Federal Reserve Sets the Pace: The world's central bank prepares to taper
GBP/USD is holding up above 1.39 after the Bank of England took baby steps toward tightening its monetary policy, saying it could change "modestly." However, only one member supported tapering bond buys already now. BOE Governor Andrew Bailey said that he sees current inflation as merely a "hump" but he is worried about secondary effects.
BOE Analysis: Newfound hawkishness is one step behind the Fed, GBP/USD remains disadvantaged
USD/CAD is trading around 1.25 ahead of Canada's July jobs report. An increase of 177,500 positions is expected as the nation extends its reopening after lockdowns in the spring. The Unemployment Rate is set to drop from 7.8% to 7.4%.
Investors seem more relaxed about China's crackdown on tech companies, a topic that was of concern earlier in the week. Coronavirus cases are also on the rise in the world's second-largest economy, with Beijing imposing restrictions. China also said it would release reserves of commodities to ease pressures on prices.
The US Senate will convene on Saturday to continue its debate on the bipartisan infrastructure deal, after attempts to amend it ran into roadblocks. Democrats plan a $3.5 trillion package after the current $1 trillion one.
Gold is trading around $1,800, falling as returns on US Treasuries rose. The precious metal has no yield.
Cryptocurrencies are consolidating their gains, with Bitcoin hovering around $40,000 and Etthereum clinging to $2,800. ETH/USD rose on Thursday as it implemented a technological change.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.