The U.S. dollar stabilizes before payrolls on Monday as traders turned their focus toward two significant events: a speech by Federal Reserve Chair Jerome Powell and Friday’s key employment report. This stability followed a week where the dollar saw its fourth consecutive weekly decline, marking nine declines in the last ten weeks.
At 04:25 ET (08:25 GMT), the Dollar Index, which measures the greenback against a basket of six other major currencies, dipped slightly to 100.035. The focus now shifts to the U.S. nonfarm payrolls report, with economists forecasting an increase of 144,000 jobs in October. This report could heavily influence the market, particularly due to the Federal Reserve’s attention on employment figures.
Federal Reserve Chair Jerome Powell is expected to provide additional insights into the Fed’s rate-cutting decisions during his speech to the National Association for Business Economics in Tennessee. Last week’s inflation readings suggested that price pressures are easing, a development that pushed the Federal Reserve to initiate a rate-cutting cycle.
Analysts believe that if the upcoming employment data shows an uptick in unemployment, the U.S. dollar could soften as markets maintain expectations for further rate cuts, potentially in November or December. These expectations are shaping the market’s cautious approach toward the dollar.
Meanwhile, across the Atlantic, the eurozone is preparing for the release of key inflation data. EUR/USD moved slightly higher to 1.1172 ahead of this crucial report. The upcoming German inflation figures will also provide early signals about the eurozone's inflationary trends.
Market analysts suggest that if eurozone inflation slows and U.S. payroll figures underwhelm, the euro may struggle to rally significantly. The European Central Bank is expected to continue with its rate-cutting stance in response to slower inflation growth across France and Spain.
The Japanese yen handed back some of its recent gains, with USD/JPY rising by 0.2% to 142.44. This reversal followed the news that Japan’s incoming prime minister signaled that the country’s accommodative monetary policy would likely remain in place.
In addition, Japanese industrial production fell by 3.3% in August, while housing starts dropped by 5.1% on an annual basis, contributing to the yen’s weakened position. Other currencies such as the Chinese yuan (USD/CNY) also saw stabilization after last week’s rally, driven by stimulus measures from the Chinese government.
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The U.S. dollar stabilizes ahead of Jerome Powell's speech and key payroll data. Economists anticipate a focus on employment.
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