Image Source: Pexels
 

NFP On Deck

The US Dollar is firmly on watch today as traders brace for the latest US labor market data. Following the weakness in the April NFP report, traders will be looking to see if this weakness continued through last month or if the labor market rebounded. On the numbers front,  the market is looking for the headline NFP to print 182k from 175k prior, the unemployment rate to hold steady at 3.9%, and average hourly earnings to rise to 0.3% from 0.2% prior. If these forecasts are met, the reaction in USD will likely be muted, neither diluting nor strengthening September rate cut chances.
 

Two-Way Risk

In terms of the most market moving outcome today, this will be seen if we get a surprise in either direction. If data is seen undershooting these forecasts, confirming fresh weakness in the labor market for a second consecutive month, this will no doubt see an uptick in September rate-cut expectations, dragging USD lower near-term. However, if we see a rebound in the data with above-forecast readings, this will likely dilute near-term easing expectations, creating room for a recovery rally in USD.
 

Technical Views

DXY

(Click on image to enlarge)

Following the breakdown below the bull channel support line, price has yet to follow-through beyond the 104.05 support level. With bearish momentum studies readings, however, focus is on a continued push lower near-term with 103.48 the next support to watch unless bulls can get back above 104.97 and back inside the bull channel. 

More By This Author: