US Dollar retreats ahead of October jobs report

The US Dollar (USD) is struggling to preserve its strength on the last trading day of the week with the US Dollar Index trading in negative territory near 112.50 after having registered gains for six straight days. The improving market mood seems to be making it difficult for the USD to outperform its rivals as investors wait for the US Bureau of Labor Statistics to release the October jobs report later in the session. Eurostat will publish the September Producer Price Index (PPI) for the Eurozone and European Central (ECB) Bank President Christine Lagarde is scheduled to deliver a speech. Finally, Canadian labour market data will also be featured in the North American economic docket.

Reflecting the risk-positive market atmosphere, Shanghai Composite remains on track to end the day with a gain of over 2% and US stock index futures rise between 0.3% and 0.55%. Meanwhile, the benchmark 10-year US Treasury bond yield fluctuates in a relatively tight channel above 4%.

On Thursday, the Bank of England (BoE) announced that it raised its policy rate by 75 basis points to 3% as expected. In the policy statement, however, the BoE said further increases in bank rate may be required but noted that the peak rate would be lower than 5.2% priced into markets. During the press conference, BoE Governor Andrew Bailey said that they may have the largest upside risk in inflation forecasts in the MPC history but the British Pound failed to stay resilient against its major rivals. GBPUSD lost more than 200 pips on Thursday and touched its lowest level in two weeks at 1.1150 before staging a rebound. At the time of press, the pair was up 0.5% on the day above 1.1200.

EURUSD fell sharply following the Federal Reserve’s policy announcements late Wednesday but found support near 0.9730. The pair trades in positive territory early Friday and continues to edge higher toward 0.9800. ECB President Lagarde reiterated on Thursday that inflation is still way too high and that they have to take action. Lagarde further added that the Euro’s exchange rate matters and that it has to be taken into account in inflation projections.

USDJPY failed to make a decisive move in either direction on Thursday and closed the day virtually unchanged at around 148.00. The pair extends its sideways grind early Friday. During the Asian trading hours, Japanese Finance Minister Shunichi Suzuki said that they have “no intention of guiding fx to certain levels by intervening.”

Gold benefited from US T-bond yields’ uninspiring performance despite the hawkish Fed tone and climbed toward $1,650 early Friday.

Following Thursday’s choppy action, Bitcoin regained its traction and was last seen rising nearly 2% on the day at $20,600. Similarly, Ethereum is up more than 3% on the day at $1,580.

Subscribe to our newsletter

Don't miss new updates on your email