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07/06/24
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USD Flat Before Key Payrolls Report
On Friday, the U.S. dollar traded largely flat in early trade in Europe as traders waited for the release of crucial U.S. employment data.
The U.S. dollar index, which measures its strength against 6 other major currencies, traded unchanged at 104.060.
This week, the dollar was on the back foot and the index is 0.5% lower this week so far, as cooling labor market conditions in the US added to the case for the Fed to cut rates this year.
Weekly jobless claims on Thursday came in slightly higher than last week’s upwardly revised 221K, supporting the market narrative this week that labor market tightness is fading.
Next up is the monthly jobs report.
Expectations are for the biggest economy in the world to have added 185K jobs last month – slightly more than the 175K jobs added in April, which was the smallest gain in six months.
The unemployment rate will likely have stayed below 4% for the 28th consecutive month.
The employment report may show the economy is losing momentum if it indicates the slowdown in job creation is continuing, but a surprise to the upside may provide a jolt higher for the dollar.
Markets have priced in nearly 0.5% of Fed rate cuts this year, with the first likely in Sept.
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