Market Commentary: US dollar gives some back ahead of non-farm payrolls


  • NZD leads, USD lags
  • Gold down $1 to $1819
  • WTI crude oil down $1.78 to $82.44
  • US 10-year yields down 2.1 bps to 4.71%
  • S&P 500 down 5 points to 4258

The US trade balance and initial jobless claims data both exceeded expectations, leading to a brief period of modest US dollar strength and some selling in bonds. However, these moves were short-lived as bond buyers re-entered the market, and the US dollar entered a prolonged decline during North American trading, which appeared to be position adjustment ahead of the non-farm payrolls report.

After the data, USD/JPY initially rose by twelve pips to reach a session high of 149.12 but gradually declined to 148.40 afterward. Concurrently, risk-related trades saw gradual improvement, although stock markets ended the session lower.

Oil prices experienced fluctuations within a $2 range, starting lower in Europe but briefly turning positive before retracing those gains later in the session. This contributed to reduced inflationary pressure, and the market is currently anticipating three full FOMC interest rate cuts next year as inflationary concerns diminish.

Taking advantage of the weakened US dollar, the euro saw gains for the second consecutive day, reaching highs around 1.0551 before trading just below that level.

Even more pronounced were the gains in the previously weakened Australian and New Zealand dollars. AUD/USD advanced during the Asian session before relinquishing its gains. It picked up momentum again during North American trading but couldn’t quite reach its earlier highs. The pair had fallen to its lowest level since March earlier in the week but appeared to be reconsidering its downward trend ahead of the jobs report. However, if the non-farm payrolls report is strong, it could lead to renewed selling pressure.

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