Here’s what you need to know on Friday, September 6:
Following a two-day sell-off, the United States Dollar (USD) The US economy is struggling to find demand in Friday’s European session. Eurostat will publish revisions to the second-quarter Employment Change and Gross Domestic Product data later in the session. More importantly, the US Bureau of Labor Statistics will publish the August employment report, which will include Nonfarm Payrolls, Unemployment Rate and wage inflation figures.
US Dollar PRICE This week
The table below shows the percentage change of the US Dollar (USD) against the major currencies this week. The US Dollar was the weakest currency against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.61% | -0.42% | -2.63% | 0.07% | 0.51% | 0.32% | -0.96% | |
| EUR | 0.61% | 0.21% | -2.04% | 0.65% | 1.12% | 0.92% | -0.39% | |
| GBP | 0.42% | -0.21% | -2.27% | 0.43% | 0.89% | 0.73% | -0.62% | |
| JPY | 2.63% | 2.04% | 2.27% | 2.72% | 3.25% | 3.16% | 1.63% | |
| CAD | -0.07% | -0.65% | -0.43% | -2.72% | 0.48% | 0.25% | -1.04% | |
| AUD | -0.51% | -1.12% | -0.89% | -3.25% | -0.48% | -0.21% | -1.49% | |
| NZD | -0.32% | -0.92% | -0.73% | -3.16% | -0.25% | 0.21% | -1.29% | |
| CHF | 0.96% | 0.39% | 0.62% | -1.63% | 1.04% | 1.49% | 1.29% |
The heatmap shows percentage changes of major currencies. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you choose the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change shown in the chart will represent the USD (base)/JPY (quote).
The USD Index extended its decline and closed in negative territory for the second consecutive day on Thursday, pressured by disappointing ADP Employment Change data. In August, private sector payrolls rose by 99,000, well below the market expectation of 145,000. Early Friday, the USD Index is trading marginally lower on the day below 101.00. Meanwhile, the 10-year US Treasury bond yield continues to slide and is down nearly 1% on the day, trading slightly below 3.7%, while US stock index futures are down between 0.2% and 0.8%. Investors expect Non-Farm Payrolls to rise by 140,000 after a disappointing 114,000 increase in July.
After rising sharply towards 1.3600 earlier in the week, the USD/CAD reversed direction and erased its gains in the second half of the week. As of early Friday, the pair is holding steady around 1.3500. Statistics Canada will release August labour market data later in the day.
Data from Germany showed on Friday that Industrial Production contracted by 2.4% on a monthly basis in July. EUR/USD showed no reaction to this figure and was last seen trading above 1.1100.
He GBP/USD remains firm and advances towards 1.3200 in early Friday after ending the previous two days in positive territory.
He USD/JPY The pair posted small losses on Thursday but came under bearish pressure again during Asian trading hours on Friday. At the time of writing, the pair is trading at 142.30, losing 0.8% on the day.
Following the bearish action seen in the first half of the week, the Gold gained bullish momentum and reclaimed the $2,500 mark. XAU/USD consolidates its gains around $2,520.
Nonfarm Payrolls FAQs
Nonfarm payrolls (NFP) are part of the U.S. Bureau of Labor Statistics’ monthly employment report. The nonfarm payrolls component specifically measures the change in the number of people employed in the U.S. over the previous month, excluding the agricultural sector.
The nonfarm payrolls figure can influence Federal Reserve decisions by providing a measure of how successfully the Fed is fulfilling its mandate of promoting full employment and 2% inflation.
A relatively high nonfarm payrolls figure means that more people are employed, earning more money and therefore likely spending more. Conversely, a relatively low nonfarm payrolls figure could mean that people are having difficulty finding work.
The Federal Reserve typically raises interest rates to combat high inflation caused by low unemployment, and lowers them to stimulate a stagnant labor market.
Nonfarm payrolls tend to have a positive correlation with the US Dollar. This means that when payrolls figures are higher than expected, the Dollar tends to rise and vice versa when they are lower.
The NFP influences the US Dollar through its impact on inflation, monetary policy expectations, and interest rates. A higher NFP typically means that the Federal Reserve will be tighter in its monetary policy, which supports the USD.
Non-farm payrolls typically have a negative correlation with the price of Gold. This means that a higher than expected payrolls figure will have a depressive effect on the price of Gold and vice versa.
A higher NFP typically has a positive effect on the value of the USD, and like most major commodities, Gold is priced in US Dollars. Therefore, if the USD gains value, fewer Dollars are needed to buy an ounce of Gold.
Moreover, higher interest rates (usually helped by a higher NFP) also reduce the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm payrolls are just one component within a larger employment report and can be overshadowed by the other components.
Sometimes, when nonfarm payrolls beat forecasts but average weekly earnings were lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the drop in earnings as deflationary.
The Participation Rate and Average Weekly Hours components can also influence market reaction, but only in rare cases, such as during the “Great Resignation” or the Global Financial Crisis.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
