Forex Today: US Dollar rebounds from two-week lows as focus shifts to March jobs report

Here is what you need to know on Friday, April 5:

The US Dollar (USD) holds steady on Friday, with the USD Index staying in positive territory above 104.00 after falling below that level for the first time in two weeks on Thursday. Eurostat will release Retail Sales data for February in the European session. Later in the day, the US Bureau of Labor Statistics will publish the jobs report for March, which will include Nonfarm Payrolls (NFP), Unemployment Rate and wage inflation figures.

US Nonfarm Payrolls Forecast: Slowdown in NFP expected after strong beginning of the year.

Nonfarm Payrolls FAQs

Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.

The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.

Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.

Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.

Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.

Following Wednesday's sharp decline, the USD Index continued to push lower in the first half of the day on Thursday. The negative shift seen in risk sentiment, however, helped the USD stay resilient against its rivals later in the American session. US stock index futures trade modestly higher early Friday after Wall Street's main indexes lost over 1% on Thursday. Meanwhile, the benchmark 10-year US Treasury bond yield stays above despite falling nearly 1% on Thursday.

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 strongest against the Canadian Dollar.

USD   -0.30% 0.15% 0.36% -0.59% -0.10% -0.37% 0.14%
EUR 0.31%   0.44% 0.67% -0.28% 0.20% -0.07% 0.44%
GBP -0.14% -0.44%   0.22% -0.72% -0.25% -0.51% -0.01%
CAD -0.36% -0.66% -0.22%   -0.95% -0.48% -0.75% -0.24%
AUD 0.59% 0.29% 0.73% 0.94%   0.48% 0.21% 0.72%
JPY 0.10% -0.17% 0.26% 0.48% -0.45%   -0.26% 0.24%
NZD 0.37% 0.08% 0.51% 0.74% -0.21% 0.26%   0.50%
CHF -0.13% -0.44% 0.01% 0.23% -0.71% -0.24% -0.50%  

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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).


The data from Australia showed in the Asian session that Exports declined 2.2% on a monthly basis in March, while Imports rose 4.8%. AUD/USD showed no reaction to these data and retreated below 0.6600 following a three-day rally.

Australian Dollar manages to hold position after losses ahead of US Nonfarm Payrolls.

EUR/USD lost its traction after advancing toward 1.0900 and closed flat on Thursday. The pair continues to edge lower early Friday and was last seen trading below 1.0850.

GBP/USD rose above 1.2650 on Thursday but reversed its direction in the American session to end the day marginally lower. The pair stays on the back foot in the European morning and declines toward 1.2600.

USD/JPY fell below 151.00 for the first time since March 21 on Friday before recovering above this level. The data from Japan showed that the Leading Economic Index improved to 111.8 in February from 109.5 in January.

Japanese Yen sticks to modest gains below two-week high against USD, focus remains on NFP.

Gold turned south after reaching a new record high above $2,300 on Thursday and closed the day in the red, snapping a seven-day winning streak. XAU/USD extends its correction on Friday and trades slightly below $2,280.

Gold price remains depressed amid modest USD strength, looks to US NFP for fresh impetus.

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.

Last release: Fri Mar 08, 2024 13:30

Frequency: Monthly

Actual: 275K

Consensus: 200K

Previous: 353K

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.


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