Here is what you need to know on Friday, October 4:
The US Dollar (USD) Index, which tracks the USD's valuation against a basket of six major currencies, extended its weekly uptrend and registered its highest daily close since mid-August on Thursday. Early Friday, the index edges slightly lower as investors gear up for the US employment report for September, which will include Nonfarm Payrolls (NFP), Unemployment Rate and wage inflation figures.
US Dollar PRICE This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.24% | 1.60% | 2.87% | 0.36% | 0.90% | 2.16% | 1.26% | |
| EUR | -1.24% | 0.36% | 1.60% | -0.85% | -0.27% | 0.93% | 0.13% | |
| GBP | -1.60% | -0.36% | 1.37% | -1.21% | -0.64% | 0.57% | -0.27% | |
| JPY | -2.87% | -1.60% | -1.37% | -2.39% | -1.96% | -0.66% | -1.51% | |
| CAD | -0.36% | 0.85% | 1.21% | 2.39% | 0.59% | 1.80% | 0.99% | |
| AUD | -0.90% | 0.27% | 0.64% | 1.96% | -0.59% | 1.21% | 0.37% | |
| NZD | -2.16% | -0.93% | -0.57% | 0.66% | -1.80% | -1.21% | -0.86% | |
| CHF | -1.26% | -0.13% | 0.27% | 1.51% | -0.99% | -0.37% | 0.86% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Investors expect the NFP to rise by 140,000 following the 142,000 increase recorded in August and see the Unemployment Rate holding steady at 4.2%. Ahead of these key data releases, the USD Index fluctuates in a tight range slightly below 102.00. Meanwhile, US stock index futures trade mixed, pointing to a cautious stance. The data from the US showed on Thursday that the number of first-time applications for unemployment benefits rose to 225,000 in the week ending September 28 from 219,000 in the previous week. On a positive note, the ISM Services PMI improved to 54.9 in September from 51.5 in August, highlighting an ongoing expansion in the service sector's business activity at an accelerating pace.
EUR/USD closed the fifth consecutive trading day in negative territory on Thursday. The pair struggles to gain traction in the European morning on Friday and trades slightly above 1.1000.
GBP/USD declined sharply and lost more than 1% on Thursday, pressured by the broad-based USD strength and dovish comments from Bank of England Governor Andrew Bailey. The pair stages a technical correction early Friday and trades in positive territory above 1.3150.
Following Wednesday's upsurge, USD/JPY continued to inch higher and rose above 147.00 for the first time since early September on Thursday. The pair lost its traction during the Asian trading hours on Friday and retreated below 146.50.
Gold dropped below $2,640 on Thursday but erased a large portion of its daily losses in the American session. XAU/USD stays relatively quiet and trades in a narrow band at around $2,660 early Friday.
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.
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 stays defensive toward 1.1000, as US NFP data looms
EUR/USD stays defensive toward 1.1000 in the European session on Friday. The pair lacks a clear directional impetus, as traders refrain from placing fresh bets ahead of the key US Nonfarm Payrolls data. The focus remains on ECB-speak as well.
GBP/USD holds recovery above 1.3150 after BoE Pill's comments
GBP/USD holds recovery gains above 1.3150 in European trading on Friday. Prudent remarks from BoE Chief Economist Huw Pill on interest rates offer a fresh lift to the Pound Sterling. Further upside, however, appears elusive as caution prevails ahead of the US Nonfarm Payrolls data.
Gold price sticks to modest gains near weekly top, bulls seem non-committed ahead of US NFP
Gold price (XAU/USD) struggles to capitalize on its modest intraday uptick and remains below the weekly top through the early part of the European session on Friday.
Nonfarm Payrolls set to grow moderately in September as markets mull bets of another big Fed rate cut
Economists expect the Nonfarm Payrolls report to show that the US economy added 140,000 jobs in September, following a job gain of 142,000 reported in August.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.