Forex Today: Dollar eases as investors wait for critical US employment data

What you need to know on Thursday, May 6:

Trading was dull across the FX board, with major pairs confined to limited intraday ranges. The greenback was the worst performer, edging lower against most of its major rivals.

The shared currency was the exception to the rule, extending its weekly decline against its American rival and finishing the day at around 1.2000. Data imbalances likely affected the pair as macroeconomic figures from the EU indicated that the economic comeback is tepid, opposed to that in the US.

GBP/USD is stable around 1.3900 ahead of the BOE’s Super Thursday. Ever since its latest meeting, the economy has shown signs of improvement, exacerbated by the speedy immunization campaign that led to economic reopenings. That means upward revisions could be expected, although it is too early to consider some form of tightening. The central bank will likely leave rates unchanged as well as the APP program. A hawkish stance from UK’s policymakers is mostly priced in, which means that the pound’s reaction will be wider in the case of a dovish BOE.

Commodity-linked currencies advanced, although the AUD/USD pair develops between familiar levels, while USD/CAD fell to 1.2251, its lowest since February 2018, holding nearby ahead of Thursday’s opening. The pair found support in soaring oil prices, as  WTI topped for the day at $ 66.73 a barrel. The commodity eased afterwards, but stronger equities maintained the CAD near its daily highs.

Gold got to recover some ground amid easing demand for the American currency, ending the day at $ 1,784.29 a troy ounce.

Wall Street closed in the green, while US government bond yields retreated modestly, reflecting a better market mood. Different Federal Reserve officials poured some cold water on Treasury Secretary Janet Yellen about higher rates. Fed’s Evans said that they are not in a hurry in any way to talk about tapering, while Fed’s Rosengren noted that significant slack remains in the economy, adding that inflation and inflation expectations look stable.

US employment data will likely take center stage on Thursday, ahead of the critical Nonfarm Payroll report to be out on Friday.

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