EURUSD rebound fades ahead of US NFP

The pre-NFP anxiety prods market players on early Friday with mixed data and geopolitical concerns, not to forget the global economic fears.

The cautious mood allows the US Dollar to pause the two-day losing streak, which in turn challenges the latest corrective bounce of the commodities and Antipodeans. However, the trading sentiment remains dicey and other major pairs lack clear directions while waiting for the all-important employment data for the US and Canada. Also important is US President Joe Biden’s speech on employment conditions and the ongoing political drama in the US House of Representatives due to the ousting of the House Speaker.

That said, the USDJPY justifies recovery in yields and a pause in the US Dollar’s retreat amid Japanese policymakers’ defense of easy-money tactics while other G10 currency pairs stay indecisive amid complex economic and political signals, mainly surrounding China and the US. It should be observed that the EURUSD fails to cheer the upbeat German Factory Orders as the ECB policymakers hesitate in promoting higher rates moving forward.

Elsewhere, Gold fails to defend the mid-week rebound while Crude bears take a breather. Further, the Wall Street benchmarks edged lower while the Asia-Pacific shares are also pressured, despite lacking momentum.

BTCUSD and ETHUSD both consolidate weekly losses as market players anticipate the early rollout of the crypto ETFs.

Following are the latest moves of the key assets:

• Brent oil licks its wounds at five-week low, around $85.30 by the press time.
• Gold price remains defensive around $1,820 as bears lick their wounds at seven-month low.
• USD Index stays defensive around 106.40 as we write, after two-day losing streak.
• Wall Street closed with mild losses while the Asia-Pacific stocks edged lower. Even so, equities in Europe and the UK post minor gains at the latest.
• BTCUSD and ETHUSD pare weekly losses around $27,600 and $1,640 as we write.

NFP-linked anxiety challenges traders

Bulls and bears jostle on the key day ahead of the employment data from the US and Canada, especially amid mixed data and unclear macro status about the global economic transition, not to forget the political upheaval. However, the US Dollar remains the key winner despite the latest inaction while riskier assets fail to lure traders.

US Dollar cheers mostly upbeat data and hawkish Fed signals, as well as upbeat economic concerns about the US, as market players await the key data. On Thursday, US Goods and Services Trade Balance improved to $-58.3 billion from $-64.7 billion but the Good Trade Balance deteriorated a bit to $-84.5 billion versus $-84.3 billion previous readings. Further, US Initial Jobless Claims rose to 207K from 205K prior but eased compared to the market expectations of 210K. With this, the four-week average of the Initial Jobless Claims dropped to 208.75K from 211.25K prior while the weekly Continuing Jobless Claims eased to 1.664 million versus 1.665 million prior. Furthermore, the US Challenger Job Cuts dropped to 47.457K for September from 75.151K prior. It should be noted that Fed’s Daly and Barkin both have been suggesting higher rates on Thursday.

The Reserve Bank of Australia’s (RBA) Financial Stability Review (FSR) said that the global financial stability risks are elevated and growing. The report also stated, “Risks include China property sector, a disorderly fall in global asset prices, exposure to commercial real estate.” Additionally, IMF's Georgieva highlights fears of global economic growth slowdown but the optimism surrounding the US and India joins the likely easing in the US-China tension, due to the likely meeting of US President Biden and China’s Xi in November, to poke the pessimists.

Crypto traders fear amid the global economic growth concerns and the US SEC tension. However, hopes of faster ETF approvals and more participation from Asia keep the BTCUSD and ETHUSD buyers hopeful.

• Strong buy: USDCAD
• Strong sell: ETHUSD, GBPUSD, Gold
• Buy: USD Index, Nasdaq, USDJPY
• Sell: DAX, FTSE 100, BTCUSD, AUDUSD, EURUSD

Employment data are the key

Looking ahead, market players will keep their eyes on the US jobs report for September as the Fed hawks promote one more rate hike and push back the much-anticipated rate cuts of 2024. Should the US employment numbers suggest higher Nonfarm Payrolls, a softer Unemployment Rate and upbeat wage growth, the US Dollar will have further upside to track, which in turn will weigh on the commodities and the Antipodeans. Alternatively, downbeat prints of the US economy could trigger an immediate pullback of the US Dollar but the overall trend will remain bullish for the Greenback as the ex-US statistics aren’t impressive while the geopolitical plays also support the US Dollar’s haven demand. Hence, the US Dollar is likely to remain positive overall but the upside may gain more strength from the upbeat data.

May the trading luck be with you!