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.

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