News & Analysis

It was a textbook reaction in gold in response to the stronger jobs and consumer sentiment data, with the metal falling, dollar and yields rising. It fell from around $2020 to a low so far of $2002. While down, it is certainly not out. It was only on Monday when it hit a new record high, albeit a short-lived one. Still, the downside could well be limited, especially if we see more evidence of waning inflationary pressures around the world.

US stocks recover from initial post-NFP losses. The closely watched US jobs report saw 199k jobs added in November, up from 150k. Meanwhile, unemployment fell to 3.7%, and wages grew at 0.4%, faster than expected. The data saw investors rein in Fed rate cut bets.

Welcome to another edition of Forex Friday, a weekly report in which we highlight selected currency themes. In this week's edition, we will discuss the US dollar in light of the NFP beat, and ahead of next week's key macro events.

EUR/USD falls after German inflation and ahead of US jobs data. USD/JPY stabilises after yesterday's slump, US non-farm payroll data up next.

USD/JPY tumbled on Thursday on speculation the BOJ may move pre-emptively to lift interest rates before wage pressures have materialised. Such a move would be economically risky and go against recent BOJ statements.

EUR/USD bounces back from a fresh monthly low (1.0755) to halt a six-day selloff.

The Yen was very strong versus the dollar, hitting a 3-month high of 151.35 after traders anticipated a rate hike from a comment by Bank of Japan’s Governor Kazuo Ueda. The oil price dipped below $70 per barrel for the first time since June. The Dow Jones barely held on to recent gains in morning trade, with the NASDAQ up 1.4% and the S&P 500 up 0.8%. Fundamental direction has been thin with jobs data mixed thus far, and the official employment report still on tap tomorrow morning.

Traders and economists expect the NFP report to show that the US created 185K net new jobs, with average hourly earnings rising 0.3% m/m (4.0% y/y) and the U3 unemployment rate remaining unchanged at 3.9%.

The GBP/USD is poised for a significant challenge in the upcoming days, spanning the end of this week and much of the next. Anticipation surrounds key data releases from both the UK and the US, with the US nonfarm payrolls report on Friday and CPI data on the horizon. Moreover, the Federal Reserve and the Bank of England are set to announce their respective interest rate decisions next week.