Dollar struggles to hold post-ADP gains ahead of NFP. The economists of Scotiabank analyze the prospects of the greenback.
USD reaction to better than expected data will be limited
Strong ADP data raised market expectations for an upside data surprise, which may mean USD reaction to better-than-consensus data will be limited. In addition, there is a risk that the ADP data significantly overstates the strength of the labor market relative to the official data, perhaps due to seasonal effects (ADP gains reflected a rebound in hospitality/services).
The dollar is taking a cautious stance on the data. Following Thursday’s gains in the ADP report, the greenback pulled back broadly to close lower for the day, a bearish sign both technically and because of its inability to benefit from clearly positive data.
There seems to be some risk of the USD ending lower after the US jobs data, short of significant disappointment at the top.
DXY weakness below the 102.75 support would be a clear bearish sign for the markets.
Read: NFP Non-Farm Payrolls Preview: Banks see labor market still pretty strong
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.
