Forex Today – Asian Session: Dollar Comes Back Ahead of Non-Farm Payrolls Report

What to watch for on Friday, October 7:

The US dollar regained its positive momentum and closed Thursday with gains against most of its major rivals. The dovish tone in global equities and rising US Treasury yields supported the dollar, while reflecting investor concerns.

The EUR/USD pair traded just below the 0.9800 figure as worse-than-expected EU data added pressure to the euro. German factory orders fell 2.4% mom in August. The annual reading, however, was better than expected, although it was down 4.1%. For its part, EU Retail Sales contracted a modest 0.3% mom in August, but fell sharply compared to a year earlier, losing 2%.

Also, the Central Bank European published the accounts of the Monetary Policy Meeting, which showed that some officials preferred a higher rate hike of 50 basis points. In addition, the median of three-year inflation expectations remained at 3%. Monetary policymakers said a depreciating euro could exacerbate inflationary pressures, adding that acting “decisively” now will avoid the need to hike at a more aggressive pace later.

The Governor of the Bank of CanadaTiff Macklem weighed in on this, saying that while easing inflation is good news, it won’t go away on its own. Markets were quick to price in the possibility of the BOC raising rates by 50 basis points in October. The USD/CAD pair rose to 1.3740.

In the US, several Federal Reserve officials were at the microphones, all of them aligned with the aggressive monetary tightening. Wall Street extended its decline after starting the day with modest losses. US Treasury yields, meanwhile, hit new all-time highs.

The Australian dollar was one of the worst performers, trading against the greenback around 0.6400 and not far off the 2022 low of 0.6362. GBP/USD also resumed its decline and is trading around 1.1150.

The dollar is appreciating against its safe-haven rivals. USD/CHF hovers around 0.9910, while USD/JPY rises and sits just above 145.00.

In cash, gold lost some ground but remained above the critical threshold of $1,700. It currently trades at $1,713 a troy ounce. Crude oil prices continued to advance, with WTI now trading at $88.80 per barrel.

On Friday, the focus will be on US employment data, as the country is to release the Non-Farm Payrolls report for September.

Source: Fx Street

You may also like