The US Dollar (USD) experienced a challenging week, despite relatively stable exchange rates. Analysts at ING have conducted a comprehensive evaluation of the Greenback’s future, focusing on the upcoming US Nonfarm Payrolls (NFP) report.
Several surveys suggest a potentially softer NFP reading than the widely accepted consensus of 200,000 jobs. While today’s economic calendar features US payrolls, aligning with the consensus at 200,000, ING economists argue that this figure may not fully capture the insights from alternative surveys, indicating a figure closer to 100,000. This discrepancy is rooted in the historical tendency of jobs data to defy expectations positively and deviate from other indicators. Therefore, while the possibility of a more subdued print exists, the recent robustness in NFP reports urges caution.
The forthcoming NFP report is poised to influence the direction of foreign exchange (FX) markets. Post Federal Reserve Chairman Powell’s testimony, there is a suspicion that markets will not hesitate to factor in potential rate cuts. Despite minimal changes in the Fed funds futures curve since the previous week, the Dollar faces tangible downside risks today. The recent strength in NFP reports serves as a noteworthy factor contributing to the prevailing uncertainty surrounding the Greenback’s performance.
