Forex Today: US Dollar struggles to find demand, all eyes on NFP

Eren Sengezer FXStreet

Here is what you need to know on Friday, June 2:

The US Dollar (USD) stays on the back foot early Friday after having suffered heavy losses against its major rivals on Thursday with the US Dollar Index trading below 103.50 in the European morning. The market mood remains relatively upbeat as focus shifts to the US Bureau of Labor Statistics' (BLS) May jobs report, which will include Nonfarm Payrolls (NFP) and wage inflation figures.

US Nonfarm Payrolls Report: Analyzing May NFP release.

On Thursday, the USD came under heavy bearish pressure after the BLS reported that the change in Unit Labor Costs for the first quarter got revised significantly lower to 4.2% from the advanced estimate of 6.3%. Moreover, Automatic Data Processing's (ADP) monthly report revealed that private sector employment in the US rose by 278,000 in May. Although this reading surpassed the market forecast of 170,000 by a wide margin, the soft wage inflation component of the report didn't allow the USD to gather strength. According to the CME Group FedWatch Tool, markets are pricing in a left than 30% probability of one more Federal Reserve rate hike at the upcoming meeting.

Meanwhile, the US Senate voted to pass the bill to suspend the debt-limit. Commenting on this development, “this bipartisan agreement is a big win for our economy,” said US President Joe Biden and told reporters that he will sign this bill into law as soon as Friday. Reflecting the risk-positive market atmosphere, main equity indexes in the US closed decisively higher on Thursday. Early Friday, US stock index futures continue to trade in the green in the early European session.

EUR/USD registered impressive gains on Thursday and erased all of its weekly losses. The pair continues to stretch higher and holds above 1.0750 in the European morning.

GBP/USD took advantage of the persistent USD weakness and rose to its highest level in two weeks above 1.2500 on Thursday. The pair clings to small daily gains near 1.2550 early Friday.

USD/JPY extended its slide into a fourth straight day on Thursday and broke below 139.00. The pair edges slightly higher but stays below that level on the last trading day of the week.

Gold price continued to push higher on Thursday as the benchmark 10-year US Treasury bond yield fell below 3.6% for the first time in nearly three weeks. XAU/USD consolidates its weekly gains at around $1,980.

US May Nonfarm Payrolls Preview: Analyzing Gold price's reaction to NFP surprises.

Bitcoin has gained traction and recovered above $27,000 from the weekly low it set near $26,500 in the Asian trading hours on Friday. Following a two-day slide, Ethereum has staged a rebound and was last seen rising more than 1% on a daily basis at around $1,900.

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.

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

RBNZ set to pause interest-rate easing cycle as new Governor Breman faces firm inflation

The Reserve Bank of New Zealand remains on track to maintain the Official Cash Rate at 2.25% after concluding its first monetary policy meeting of this year on Wednesday.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.