Forex Today: US Dollar consolidates weekly gains as focus shifts to US jobs report

Eren Sengezer FXStreet

Here is what you need to know on Friday, August 4:

The US Dollar stays relatively quiet early Friday as the USD Index holds steady at around 102.50 after snapping a five-day winning streak on Thursday. Retail Sales data for June will be featured in the European economic docket on Friday. Later in the day, July jobs report from the US, which will include Nonfarm Payrolls and wage inflation data, will be watched closely by market participants. Statistics Canada will also release the labor market data.

Following a bearish opening on Thursday, Wall Street's main indexes managed to stage a rebound and closed the day with small losses. In addition to the modest improvement seen in market mood, mixed macroeconomic data releases from the US caused the USD rally to lose steam. Early Friday, US stock index futures trade in positive territory, pointing to an upbeat tone.

US Nonfarm Payrolls Forecast: July NFP release expected to show steady job market.

Factory Orders in the US rose 2.3% in June while the weekly Initial Jobless Claims came in at 227,000 for the week ending July 29, matching the market expectation. The ISM Services PMI edged lower in July but held above 50, while the Employment Index component of the survey retreated to 50.7 from 53.1, highlighting a loss of momentum in the service sector's job growth.

EUR/USD staged a rebound after falling toward on Thursday and stabilized at around 1.0950 early Friday. The data from Germany showed earlier in the day that Factory Orders increase 7% in June, much better than the market forecast for a 2% contraction.

GBP/USD touched its lowest level in over a month at 1.2622 on Thursday before recovering back above 1.2700. The Bank of England (BoE) raised its policy rate by 25 basis points (bps) to 5.25% as expected. In the post-meeting press conference, BoE Governor Andrew Bailey refrained from committing to additional rate hike and caused Pound Sterling to weaken against its rivals during the European trading hours on Thursday.

The Reserve Bank of Australia (RBA) lowered inflation and growth forecasts in its quarterly Monetary Policy Statement (MPS) published on Friday. Further tightening of the policy could provide some insurance against upside inflation risks, the RBA noted in its publication. Meanwhile, China’s Commerce Ministry announced on Friday that the country will lift the anti-dumping and anti-subsidy tariff on barley imports from Australia, effective August 5. AUD/USD edged higher following these developments and was last seen trading in positive territory above 0.6550.

USD/JPY turned south and lost nearly 100 pips on Thursday. The pair holds steady above 142.50 early Friday.

Despite the renewed US Dollar weakness on Thursday, XAU/USD struggled to gain traction as the benchmark 10-year US Treasury bond yield continued to push higher above 4.1%. Gold price moves sideways slightly above $1,930 in the European morning.

Bitcoin holds steady above $29,000 after moving sideways in a narrow channel on Thursday. Ethereum remains directionless while fluctuating between $1,800 and $1,850.

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.

GBP/USD flirts with 1.3500 as USD finds fresh demand

GBP/USD is flatlining near the 1.3500 level in Europe on Tuesday, facing some pressure from renewed US Dollar demand as a safe-haven amid surging Oil prices and inflationary concerns. The focus now remains on the Middle East headlines, with Wednesday's US CPI data the key event risk this week.

EUR/USD stays weak near 1.1550 amid US-Iran impasse

EUR/USD struggles to gain any meaningful traction and hovers near the 1.1550 area in the European session. Traders seem hesitant to place aggressive bets and opt to wait for further developments surrounding the Middle East crisis and this week's release of the latest US inflation figures.

Gold off two-month highs, back below $4,400 amid surging Oil prices

Gold retreats from its highest level since June 5 at $4,435, touched earlier this Tuesday, and slides back below the $4,400 mark in European trading. Surging Oil prices, amid the US-Iran impasse on talks to reopen the Strait of Hormuz, rekindled inflation concerns, lending support to the US DOllar at the expense of the non-yielding bullion.

Pi Network holds at key support as broader market declines

Pi Network steadies around $0.08745 after two consecutive days of losses, capped below the $0.1000 psychological threshold. Retail demand in PI derivatives remains firm, with Open Interest above $9 million, even as broader crypto market sentiment wanes. Technically, PI faces a steeper correction, as it lacks upside momentum to support a near-term recovery.

The inflation narrative is still way more important than the employment story

Core bonds sold off yesterday with the belly of the curve slightly underperforming in the US while European curves showed more of a bear flattening. Daily changes on the US curve varied between +4.7 bps (2-yr) and +6.4 bps (7-yr).

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.