US dollar weakens ahead of US payroll report
Philip McHugh September 3rd 2021 - 2 minute read
The US dollar stumbled again yesterday, in response to falling US Treasury yields.
Meanwhile, the pound is son the defensive this morning, with GBP/EUR muted at €1.1636 and GBP/USD subdued at $1.3826. GBP/CAD is rangebound at CA$1.7355, while GBP/AUD and GBP/NZD retreat to AU$1.8634 and NZ$1.9415 respectively.
Centre stage today will be the publication of the latest US payroll report, will a larger-than-expected slowing of employment growth apply further pressure to the US dollar?
What’s been happening?
The US dollar extended its losing streak into its fifth consecutive session on Thursday, with the ‘greenback’ being undermined by falling US Treasury yields as well as lingering concerns over Wednesday’s lacklustre ADP employment figures.
This offset the publication of some positive US data releases, with USD investors largely shrugging off stronger-than-expected factory order figures and initial jobless claims.
The pound, meanwhile, traded with modest gains yesterday, with Sterling sentiment being supported by an upbeat market mood, although these gains remained capped amidst ongoing uncertainty over the UK’s economic recovery.
At the same time, the euro traded without any strong directional bias on Thursday, amidst fading speculation that the European Central Bank (ECB) could strike a more hawkish tone following next week’s policy meeting.
What’s coming up?
Top of the agenda today will undoubtedly be the publication of the latest US non-farm payrolls.
Should August’s payroll figures disappoint similarly to Wednesday’s ADP employment print, then the US dollar could face some significant selling pressure later this afternoon.
Any selloff could be reinforced by the subsequent publication of the ISM non-manufacturing PMI, which is forecast to report US service sector growth slowed in August.
In the meantime, the publication of the UK’s own services PMI may provide some direction for the pound this morning. Expect to see Sterling falter if August’s finalised figures confirm activity in the service sector slowed to a six-month low last month.
The release of the Eurozone’s latest retail sales figures will be the focus for EUR investors this morning. Will a sharp drop off in sales growth limit the appeal of the euro today?
Written by
Philip McHugh