The dollar index continued to rise during early Friday trading, with all eyes on the publication of non-farm payrolls later in the day. Judging by the greenback gains over the last few sessions, foreign exchange traders have been positioning themselves for a number that at least matches the consensus of 664,000 new jobs created during May. If the actual number is on or above consensus, it will be another sign that the US economy is starting to run hot. Such a scenario would be highly supportive for the dollar, with the Fed coming under more pressure to start thinking, and maybe talking, about tapering.
ADP data strongly surpassed forecast, with almost a million new jobs created last month in the US. Investors are awaiting Friday’s non-farm payroll numbers, but yesterday’s data are showing that US recovery is probably stronger and quicker than expected. What does it mean for the markets? In a few words the US job market recovery could force the Fed to act sooner than forecast with tapering. Consequently the bullion price has fallen while the greenback is rebounding, confirming once again the negative Gold-USD correlation.
From a technical point of view the recent decline, even if sharp, could be seen as a correction and not yet as an inversion, unless the dollar and bonds recovery continues.
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
Stock markets opened mostly higher in Europe for the last trading session of the week, with Utilities and Retailers registering the best performance ahead of a key day on the macro front. All eyes will be on the US jobs report today as many investors remain curious to see if the actual data will echo this week’s hawkish tone from Fed officials about the future of its massive bond buying program. Paradoxically, a weaker than expected jobs report would keep the prospect of a dovish Fed alive, at least for some time, and remain a strong bullish catalyst for riskier assets. On the other hand, a better NFP than estimated would strongly revive inflation worries and push the Fed to start tapering talks sooner than initially anticipated, which would become a new bearish driver for share markets.
Pierre Veyret– Technical analyst, ActivTrades
Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.
