Mood turns cautious as focus shifts to US jobs report

Following Thursday’s choppy market action, investors seem to have turned cautious ahead of the US June jobs report on Friday. The US Dollar Index continues to edge higher above 107.00, US stock index futures are down between 0.4% and 0.6% and the 10-year US T-bond yield stays calm near 3% following the two-day rebound. The European economic docket will not be featuring any high-impact data releases ahead of the weekend. Statistics Canada will release the Unemployment Rate data for June as well.

Wall Street’s main indexes closed decisively higher on Thursday as risk flows dominated the markets. Growing concerns over China going into another lockdown and recession fears, however, don’t allow a steady risk rally to take place.

EUR/USD slumped below 1.0100 during the European trading hours on Friday and touched its lowest level in nearly 20 years. The pair managed to recover a small portion of its daily losses but continues to trade deep in negative territory. The European Central Bank’s (ECB) June policy meeting showed on Thursday that Governing Council members agreed the revised medium-term inflation outlook required further steps to be taken in normalising monetary policy.

GBP/USD came under heavy bearish pressure early Friday and fell below 1.1950. British Prime Minister Boris Johnson announced his resignation on Thursday. Bank of England (BOE) policymaker Catherine Mann argued on Thursday that the uncertainty about the inflation process was strengthening the case for front-loading interest rate rises.

USD/JPY continues to move sideways below 136.00 following a steep drop with the initial reaction to reports of Japanese former Prime Minister Shinzo Abe getting shot on Friday while campaigning in the city of Nara.

Gold closed virtually unchanged on Thursday and stays relatively quiet at around $1,740 on Friday.

Bitcoin benefited from the risk-positive market environment and rose to its highest level in three weeks above $22,000 early Friday before erasing a large portion of its daily gains. Ethereum closed the previous two days in positive territory and climbed above $1,200 on Friday.

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