|

Forex Today: Dollar ends four-week positive streak ahead of NFP week

What you need to take care of on Monday, March 6:

The Greenback lost ground on Friday and finished the week lower. Positive data from China and a retreat in US yields kept the DXY in negative territory. US Stocks posted weekly gains after sharp losses in February. The improvement in market sentiment contributed to weakening the Dollar, which posted the first weekly loss in a month after a positive February.

It could be a quiet start to a busy week that will bring new information, interest rate decisions and fresh guidance from central banks. The Reserve Bank of Australia will have its meeting on Tuesday (25 bps rate hike expected) and the Bank of Canada on Wednesday; Fed Chair Powell will testify to Congress (Tue/Wed) on the Semiannual Monetary Policy Report. China will report trade (Tuesday) and inflation (Thursday).

The key day will be Friday with the Non-farm payrolls report; Canada will also release employment data. During the weekend, China's annual "Two Session" (parliamentary meeting) kicks off. The Chinese government is set to formalize government titles and announce its GDP target.

EUR/USD posted a modest weekly gain, enough to become the best performance since early January. The rebound occurred from the 20-week Simple Moving Average and was capped below 1.0700. Eurozone inflation data triggered a decline in European bonds. Rising EZ yields helped the Euro.

The benefit from the agreement between the United Kingdom and the European Union was short-lived for the Pound. GBP/USD continues to move sideways, supported by 1.1900, unable to retake 1.2000. EUR/GBP rebounded back to the 0.8850 area.

The Japanese Yen finished the week mixed despite higher yields. USD/JPY is facing a strong resistance around 137.00. EUR/JPY posted the highest weekly close since November, but it was far from the highs below 145.00.

Among majors, the New Zealand Dollar was the best performer. Back in February, the Reserve Bank of New Zealand raised the OCR by 50 basis points to 4.75%, signalling further hikes ahead. NZD/USD rose after four weekly slides, still unable to rise above the 20-day SMA at 0.6260.

Considering the most traded currencies globally the Chilean Peso (CLP) and the Mexican Peso (MXN) were the week's biggest gainers. USD/MXN dropped below 18.00 for the first time since 2018.

Yields remain relevant for currencies, with the US 10-year at 4% and the German 10-year at 2.70%, the highest weekly close since 2011. Bond market volatility is expected to continue next week.

Gold had the best week since January, recovering from two-month lows to the $1,850 area despite higher yields. Price rose constantly since Monday. Silver ended a negative six-week streak, climbed from four-month lows, back above the $21.00 area. The outlook for metals has improved with the bond market still representing a critical risk in both directions.

Oil prices finished the week up by around 4%. On Friday prices rose almost 2% after being down 3% on reports that the United Arab Emirates (UAE) is having an internal debate about leaving the Organization of the Petroleum Exporting Countries (OPEC). The latest round of US and Chinese economic activity data helped prices hold above YTD lows but not enough to boost WTI back above $80.00.

Cryptocurrencies failed to benefit from higher equity prices and a weaker Dollar. Bitcoin lost more than 4% on Friday, to the lowest level in four weeks, hit by Silvergate woes.


Like this article? Help us with some feedback by answering this survey:

Author

Matías Salord

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

More from Matías Salord
Share:

Editor's Picks

AUD/USD softens below 0.7050 on risk-off mood, China's Manufacturing PMI data looms

The AUD/USD pair declines to around 0.7025 during the early Asian session on Monday. The US Dollar strengthens against the Australian Dollar amid elevated geopolitical tensions in the Middle East. China’s RatingDog Manufacturing Purchasing Managers Index report is due later on Monday. Traders will closely monitor the Reserve Bank of Australia interest rate decision on Tuesday.



USD/JPY meets support near 157.00

USD/JPY retreats for the third consecutive day on Friday, revisiting the 157.00 region before attempting some recovery as investors continue to assess the latest BoJ meeting, where the central bank left rates unchanged, as widely anticipated.

Gold sinks to fresh yearly lows despite risk-off mood as Fed rate hike bets weigh

Gold slips to fresh year-to-date lows on Friday. The metal struggles despite a risk-off mood across markets, as expectations of further Federal Reserve (Fed) interest rate hikes continue to dominate price action, leaving Gold on track to end the month in negative territory.


Week ahead: Nonfarm Payrolls and US midterm elections take center stage
The US dollar traded higher against most of its peers this week, beginning the week on a solid footing amid expectations of a hawkish FOMC decision on Wednesday. Although market participants were convinced that a rate hike was off the table, they were on the lookout for clues and hints on whether they were correct in nearly fully pricing in a 25bps rate hike in December.
Middle East War updates: Iran warns of expanded strikes against US despite progress in talks

Here’s a brief recap of the key developments in the Middle East war that occurred over the weekend, which are expected to have a significant impact on markets in the upcoming week.

The 2% inflation target came from a throwaway remark. It now moves trillions
The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.