This is what you need to know to trade today Friday June 3:
Following Wednesday’s decisive bounce, the US dollar index lost its traction and erased much of its weekly gains on Thursday. Markets remain relatively quiet early on Friday as investors await US Non-Farm Payrolls (NFP) data for May. US stock index futures are trading flat after posting strong gains on Thursday, with the 10-year US Treasury yield still moving sideways near 2.9%. Retail sales for April will be published in the European economic calendar. Looking ahead to the weekend, the US ISM Services PMI report will also get a boost.
May Non-Farm Payroll Preview: Analyzing Gold’s Reaction to NFP Surprises
Data released by ADP showed on Thursday that US private sector employment only increased by 128,000 people in May. This is the lowest figure since the start of the coronavirus pandemic and falls short of market expectations of 300,000 jobs, causing the dollar to fall further.
Lael Brainard, Vice Chair of the US Federal Reserve, told CNBC on Thursday that a pause in rate hikes in September was very unlikely. “We are certainly going to do what is necessary to bring inflation back down,” Brainard added, reiterating that the economy still has a lot of momentum. However, these hawkish comments did not help the dollar gain strength against its rivals.
Markets expect NFPs to rise by 325,000 in May, after rising by 428,000 in April. Analysts at Goldman Sachs, however, said they expect growth of 225,000. “Job growth tends to slow during the spring hiring season, when the labor market is tight – particularly in May, ahead of the arrival of the summer youth workforce – and all four Big Data employment indicators we follow suggest a report below consensus,” the analysts explained.
Meanwhile, the OPEC and its allies decided to increase oil production by almost 650,000 barrels per day in July and August, compared to the increase of 400,000 barrels per day initially forecast. However, the group refrained from excluding Russia from future quotas. Oil prices rose in the second half of trading on Thursday with West Texas Intermediate a barrel gaining almost 2.5% before entering a consolidation phase near $117.00 early on Friday.
The EUR/USD consolidates gains near 1.0750 after Wednesday’s sharp rally. Eurozone retail sales are expected to rebound in April after contraction of 0.4% in March.
The GBP/USD erased much of its weekly losses on Thursday but appears to have lost its upside momentum before testing 1.2600. UK markets will remain closed on Friday and the dollar’s reaction to the US data could boost the pair’s action.
The Prayed it extended its bounce amid broad dollar weakness and broke above $1,860 on Thursday. At press time, XAU/USD was trading sideways around $1,865.
US Non-Farm Payrolls Flash: Analyzing Gold’s Reaction to NFP Surprises.
For the second consecutive day, the USD/JPY It trades a short distance from 113.00. The governor of the Bank of Japan, Haruhiko Kuroda, reiterated earlier in the day that they must maintain an easing policy to create an economic environment in which wages can increase more.
Source: Fx Street
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