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MTrading Team • 2024-04-05

GBPUSD drops back toward 1.2600 on firmer US Dollar, focus on US jobs report

GBPUSD drops back toward 1.2600 on firmer US Dollar, focus on US jobs report

The market portrays the usual pre-NFP indecision early Friday but the risk-off mood allowed the US Dollar to extend the previous day’s recovery from a fortnight low. Also restricting the trading momentum could be a holiday in China, as well as mixed data in the Asia-Pacific zone.

While the US Dollar manages to remain firmer ahead of the key US employment report, EURUSD seesaws around a two-week high marked the previous day, grinding between 100-SMA and 200-SMA by the press time. It’s worth noting, however, that the GBPUSD remains pressured while extending Thursday’s pullback from a two-week top whereas USDJPY picks up bids to reverse the early-day fall to the lowest level in a fortnight.

AUDUSD and NZDUSD snap three-day winning streaks while USDCAD remains firmer for the second consecutive day.

That said, Gold price stays defensive, mildly offered at the latest, as it keeps the previous day’s pullback from the all-time high while crude oil prints the first daily loss, so far, in seven days.

At the last, BTCUSD and ETHUSD mark the first daily loss in three amid mixed clues.

Following are the latest moves of the key assets:

  • Brent oil snaps a six-day uptrend to retreat from the highest level since late October, mildly offered near $91.30 as we write.
  • Gold price extends the previous day’s retreat from the all-time high, close to $2,288 at the latest.
  • The USD Index prints the first daily gains in four near 104.30 by the press time.
  • Wall Street closed in the red while the Asia-Pacific stocks edged lower. Further, shares in Europe and the UK traded mixed during the initial trading hour.
  • BTCUSD and ETHUSD both print mild losses while snapping a two-day rebound to around $67,500 and $3,310 at the latest.
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US Dollar pares the first weekly loss in four ahead of NFP…

The US Dollar dropped to a multi-day low early Thursday before staging a recovery during the North American trading session, backed by the risk-off mood. The Greenback’s rebound got additional support from the market’s consolidation ahead of the US job data and holidays in China on Friday and teases the sellers amid a lackluster Asian session.

That said, the US Dollar Index (DXY) initially dropped to the lowest level in two weeks before bouncing off on the downbeat sentiment due to the headlines suggesting Iran’s retaliation to Israel’s attack on its consulate in Syria. Also highlighting the geopolitical fears were the US-Israel talks for opening more transit routes for humanitarian aid. Furthermore, the mixed feelings about US Treasury Secretary Janet Yellen’s visit to China, scheduled for the next week, also kept the traders on their toes and allowed the DXY to rebound from a multi-day low.

In doing so, the Greenback’s gauge versus the six major currencies also benefited from the hawkish comments of the Federal Reserve (Fed) officials from Richmond, Cleveland, Chicago, and Minneapolis. It’s worth noting, however, that the US weekly jobless claims and the monthly prints of the Goods Trade Balance, as well as the Goods & Services Trade Balance, failed to inspire the US Dollar bulls by posting mixed outcomes. That said, the US Treasury bond yields also remain depressed even if the Wall Street benchmarks closed in the red. Early on Friday, the market’s cautious mood ahead of the key US data joins China’s holiday, as well as the prevailing geopolitical fears, to underpin the DXY’s first daily positive in four.

Elsewhere, the softer-than-expected prints of German Factory Orders and Import Price Index challenge the EURUSD bulls amid recently dovish comments from the European Central Bank (ECB) officials. On the other hand, downbeat prints of the UK housing price data and fears about the British economic transition join the broad-based US Dollar recovery to weigh on the GBPUSD. That said, USDJPY struggles for clear directions despite recently bouncing off a two-week low as Japan’s Coincident Index and Leading Economic Index for April print mixed data while officials push back the odds of witnessing further rate cuts from the Bank of Japan (BoJ).

Gold Price (XAUUSD) remains on the back foot for the second consecutive day, extending the previous day’s retreat from the all-time high, as market players prepare for the all-important US employment report for March. Further, Crude Oil also retreats from the highest level since October 2023 amid a trader’s preparations for the US data. It should be noted that the escalating geopolitical crisis in the Middle East flag supply crunch fears and propel the black gold price.

On a different page, supply shortage on exchanges pushes large bankers toward the Bitcoin miners and underpins the BTCUSD strength ahead of the much-awaited halving. Elsewhere, massive growth for the Ethereum network earnings during the first quarter (Q1) of 2024 propelled the ETHUSD prices in the last two consecutive days. However, the market’s consolidation before the key US employment numbers and Bitcoin halving triggered a pullback in the crypto markets.

  • Strong buy: USDCAD, USDJPY, US Dollar
  • Strong sell: AUDUSD, NZDUSD, GBPUSD
  • Buy: BTCUSD, ETHUSD, Nasdaq, Gold

All eyes on the US and Canada jobs report…

Given the scheduled release of the US and Canadian employment report for March up for publishing, the market’s risk aversion and the latest confidence in the hawkish Fed talks could allow the US Dollar bulls to keep the reins. However, it all depends upon how well the US employment figures manage to portray the tight labor conditions and increase in wages. That said, the market forecasts suggest a reduction in the headline Nonfarm Payrolls (NFP) numbers to 200K from 275K while the Unemployment Rate is expected to remain unchanged at 3.9%. Further, the Average Hourly Earnings are likely to improve.

Apart from that, the Eurozone Retail Sales, Canada Ivey PMI data, and speeches from various Fed officials will also entertain traders and hence should be watched carefully.

May the trading luck be with you!