The US Dollar (USD) is facing downward pressure as investors await the Nonfarm Payrolls (NFP) report, which has the potential to cause volatility in the currency markets. Recent data pointing to weakness in the labor market has led to speculation that the US Federal Reserve (Fed) may consider a larger interest rate cut than previously anticipated. A significant miss in the NFP numbers could confirm this expectation, while a strong result could lead to a surge in the US Dollar and a reversal of rate cut expectations.
The upcoming Nonfarm Payrolls report, along with key indicators such as the Unemployment Rate and Average Hourly Earnings, will set the tone for market sentiment. Additionally, Federal Reserve Governor Christopher Waller’s post-NFP speech could provide further insight into the Fed’s future monetary policy decisions.
Key Market Movers Today: All Eyes on Nonfarm Payrolls
- The US Jobs Report for August is scheduled to be released at 12:30 GMT, with expectations as follows:
- Nonfarm Payrolls expected to increase by 160,000.
- Monthly Average Hourly Earnings expected to rise to 0.3%.
- Unemployment Rate expected to decline to 4.2%.
- Following the release of the Jobs Report, two Fed speakers will address the markets:
- NY Fed President John Williams at 12:45 GMT.
- Fed Governor Christopher Waller at 15:00 GMT.
- Global equities are trading lower, with US and European markets experiencing slight declines.
- Market expectations show a 59.0% chance of a 25 basis points rate cut in September and a 41.0% chance of a 50 bps cut.
- The US 10-year benchmark rate is hovering around 3.70%, close to its lowest level of the year.
US Dollar Index Technical Analysis: Key Levels to Watch
The US Dollar Index (DXY) reflects the current market sentiment, with investors pricing in the possibility of a more substantial rate cut by the Fed. Despite economic data suggesting a soft landing for the US economy, aggressive rate cuts are unlikely as they could lead to inflationary pressures.
Key technical levels for the US Dollar Index include:
- Resistance at 101.90, with further resistance at 103.18 and 104.00.
- Support at 100.62, followed by 99.58 and 97.73.
Overall, the US Dollar is facing downward pressure ahead of the NFP report, with market participants closely watching for any signs of a shift in Fed policy.
US Dollar Index: Daily Chart