It's NFP Day. During the Asian session, the Reserve Bank of Australia will release its Monetary Policy Statement, following Tuesday's pause. On European hours, Germany will report Factory Orders and Eurostat will release Retail Sales data. Later, Canada and the US will release their employment reports.
Here is what you need to know on Friday, August 4:
The US employment report is due on Friday, with Nonfarm Payrolls expected to have risen by 200,000 in July, below the 209,000 recorded in June. The Unemployment Rate is expected to remain at 3.6%, and Average Hourly Earnings are expected to rise at an annual rate of 4.2%. These numbers will close a week full of employment figures that have so far shown small signs of softening. The NFP report will be closely watched and is expected to trigger volatility in the markets.
NFP Preview: Forecasts from 9 major banks, moderate downward trend in job growth
Data released from the US on Thursday showed that Initial Jobless Claims rose to 227,000 for the week ended July 29, as expected. Q2 Unit Labor Costs rose at a rate of 1.6%, below the expected 2.6%, and Q1 was revised from 4.2% to 3.3%. Factory Orders rose by 2.3% in June, in line with expectations, while the ISM Services PMI declined from 53.9 to 52.7, below the estimated 53.
Analysts at Wells Fargo on US Productivity:
Productivity growth bounced back strongly in Q2, surpassing expectations and rising at a 3.7% clip. Over the past year, output per hour worked has risen 1.3%, the first positive one-year gain since late 2021. The improving trend in productivity along with slowing nominal wage growth points to inflationary pressures from the labor market starting to subside.
US economic figures had limited impact on the US Dollar, as caution prevailed across markets. US stocks finished modestly lower, and the US 10-year Treasury yield jumped to 4.17%, the highest since November. The US stock market continues to trend lower, following Fitch's credit downgrade, as investors appear to be taking profits after the rally that began on July 10.
The US Dollar Index hit fresh weekly highs but later declined, ending a five-day positive streak, trading around 102.50. EUR/USD hit monthly lows below 1.0950 but then rebounded, ending flat near 1.0950. Germany will report Factory Orders and the Eurozone will release Retail Sales data on Friday.
The Bank of Japan announced a second unscheduled round of bond buying to cap the increase in Japanese Government bond yields. USD/JPY reached a monthly high just below 144.00 before turning to the downside, ending around 142.50.
As expected, the Bank of England (BoE) raised its key rate by 25 bps to 5.25%, which is the highest level in 15 years. There was a three-way split on the Monetary Policy Committee, with two members voting for a 50 bps hike and one member for no change. It is not clear what the BoE will do next, and there will be two monthly inflation reports before the September meeting. The pound weakened moderately after the decision, with GBP/USD bottoming at 1.2620, the lowest level in almost five weeks, before bouncing to the upside above 1.2700.
Analysts at TD Securities on BoE:
Language around the hike suggests the MPC is preparing to reach a terminal rate soon; we continue to expect 25bps hikes in both September and November, but the probability of a November hike, while still our base case, is now lower.
AUD/USD finished moderately higher after falling sharply on the previous two days. The trend remains to the downside, but the pair was able to hold above 0.6500. The Reserve Bank of Australia (RBA) will release its Statement on Monetary Policy, including new macroeconomic forecasts.
USD/CAD rose for the third day in a row but the bullish momentum faded. The pair was unable to break above June highs and retraced towards 1.3350. Canada will report employment data on Friday, with employment change expected to be positive at 21,100, following a surge of 59,900 in June; and the Unemployment Rate is expected to rise modestly from 5.4% to 5.5%.
USD/CHF declined after rising for five consecutive days, falling to 0.8730. Switzerland reported a decline in the annual Consumer Price Index (CPI) to 1.6%, the lowest since January 2022.
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD pulls away from daily lows, stays below 1.1000
EUR/USD stages a modest rebound from the daily low it set at 1.0950 on upbeat US data releases but remains below 1.1000 in the American session. The improving risk mood limits the US Dollar's gains and helps the pair find support.
GBP/USD rebounds to 1.2850 on improving risk mood
GBP/USD regains its traction and trades marginally higher on the day near 1.2850. Although the pair came under bearish pressure after strong US data releases, it managed to reverse its direction with risk flows starting to dominate the action in financial markets.
Gold holds on to modest gains above $2,450
Gold trades in positive territory above $2,450 in the American session on Thursday after dropping toward $2,430 with the immediate reaction to the stronger-than-forecast US data. The benchmark 10-year US yield is up more than 2% on the day above 3.9%, capping XAU/USD's upside.
AAVE price eyes for rally after retest of support level
Aave (AAVE) price trades slightly higher during the Asian trading session on Thursday after surging on Wednesday. On-chain data shows that open interest, daily active addresses and development activity are rising, signaling a bullish trend.
Fed rate cut in September? The data will decide
The US economy is currently navigating a period of slowing growth, persistent inflation, and a tight labour market. The Fed's aggressive monetary policy tightening over the past year has started to show results in moderating inflation