Forex Today: Eyes on US jobs report as trading conditions normalize
Here is what you need to know on Friday, July 5:
Following the Independence Day holiday in the US, trading conditions are starting to normalize early Friday. Eurostat will release Retail Sales data for May and later in the day the US Bureau of Labor Statistics will release the June jobs report, which will include Nonfarm Payrolls, Unemployment Rate and wage inflation figures. Statistics Canada will also publish labor market data ahead of the weekend.
The US Dollar (USD) trades under modest bearish pressure as the currency still feels the negative impact of Wednesday's disappointing data releases. The US Dollar Index closed the first four days of the week in negative territory and was last seen posting small losses near 105.00. On a weekly basis, the index was down nearly 0.8%.
US Dollar PRICE This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.05% | -1.02% | 0.03% | -0.49% | -0.96% | -0.36% | 0.04% | |
| EUR | 1.05% | -0.20% | 0.78% | 0.25% | -0.04% | 0.38% | 0.78% | |
| GBP | 1.02% | 0.20% | 0.99% | 0.46% | 0.18% | 0.58% | 0.99% | |
| JPY | -0.03% | -0.78% | -0.99% | -0.54% | -0.94% | -0.40% | 0.02% | |
| CAD | 0.49% | -0.25% | -0.46% | 0.54% | -0.43% | 0.13% | 0.53% | |
| AUD | 0.96% | 0.04% | -0.18% | 0.94% | 0.43% | 0.41% | 0.90% | |
| NZD | 0.36% | -0.38% | -0.58% | 0.40% | -0.13% | -0.41% | 0.43% | |
| CHF | -0.04% | -0.78% | -0.99% | -0.02% | -0.53% | -0.90% | -0.43% |
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).
The Labour Party has officially won enough seats in the UK’s 2024 general election to have a majority in parliament, as widely anticipated. Labour Leader Keir Starmer will become the next prime minister. This development don't seem to be having a noticeable impact on Pound Sterling's valuation. At the time of press, GBP/USD was trading marginally higher on the day near 1.2800.
EUR/USD continues to edge higher after posting small gains on Thursday and trades in positive territory above 1.0800 in the European morning on Friday.
USD/CAD stays under bearish pressure and trades near 1.3600 ahead of jobs data from the US and Canada.
USD/JPY extends its correction from the multi-decade high it set near 162.00 earlier in the week and trades below 161.00 to start the European session.
Following Wednesday upsurge, Gold fluctuated in a very narrow channel and closed the day virtually unchanged. XAU/USD gains traction early Friday and trades modestly higher on the day above $2,360.
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.
Read more.Next release: Fri Jul 05, 2024 12:30
Frequency: Monthly
Consensus: 190K
Previous: 272K
Source: US Bureau of Labor Statistics
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
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
