Dollar inches higher ahead of Job Report

US Equities

US indices were trading at the highest in two weeks yesterday, after Trump advisors talked down recent trade war tensions, markets rallied on the idea that tariffs were imposed just to start negotiations. But this optimism ended by the close of the US trading session as president Donald Trump asked the United States trade representative to consider additional $100 billion in tariffs against China. Indices tanked after the trade representative, Robert Lighthizer, supported Trump’s move. Markets will be waiting for any response from China regarding this development.


The Dollar index traded higher and was able to break out from the trading range that was consolidating in for five days. The dollar gained some strength ahead of today’s employment report. Unemployment rate is expected to fall to 4% after being steady for the past four months. A reading of 4% will be the lowest since December 2000. Moreover the Non-Farm Payrolls number for March is expected to be near 190k. Last month, February numbers showed the highest gains in Non-Payrolls since January 2015. Traders will be waiting for any revision in these numbers. Fed Chairman, Powell, will be speaking about the economic outlook at the Economic Club of Chicago.


Euro reached five weeks low against the dollar as economic data from Eurozone softened. German factory orders and Services PMI from different countries came out lower than expected. On a bigger picture, EURUSD is still trading in a range of 400 pips since mid-January but approaching the bottom of the consolidation pattern.


The British pound tumbled yesterday wiping out the gains of four consecutive days. The GBPUSD traded at the lowest since mid-March. Traders were waiting the Services PMI to show some strength in the services sector in the United Kingdom which will boost the currency, but this didn’t happen, the number came out well lower than expected which led to the drop.


The Japanese Yen traded lower against the US dollar, the USDJPY reached the highest since late February, as investors felt the easing of trade war tensions. But the pair gave up some of its gains after President Trump asked for more tariffs after the close of the US trading session. In terms of data, the real earnings in Japan dropped for the third consecutive month, which might slow the consumer spending and add pressure on the Bank of Japan to reach its price target of 2%.


The Canadian Dollar reached a five weeks high against the United States Dollar as traders are expecting a progress in the NAFTA deal negotiations. In terms of data, today is a crucial one for CAD traders as markets await the job reports from Canada and United States and also the Ivey Manufacturing PMI from Canada.


Gold Prices continued on the down side in yesterday’s trading as traders shifted to risky assets. Gold traded at lows of $1323. But the shining metal pared some of its losses through the Asian trading session after President Trump’s comments on new tariffs.


Oil prices fell in the Asian session after U.S. President Donald Trump’s threat of new tariffs on China reignited fears of a trade war between the world’s two biggest economies. WTI traded at lows of $62.80 per barrel. OPEC and some non-OPEC producers are committed to cut the output by around 1.8 million barrels per day by the end of 2018 to ensure healthy price levels to boost investments in the industry

The most important economic events:

GMT Country Event Expectation Previous
12:30 US Nonfarm Payrolls (Mar) 193 313
12:30 US Private Nonfarm Payrolls (Mar) 190 287
12:30 US Unemployment Rate (Mar) 4.0% 4.1%
12:30 US Average Hourly Earnings (MoM) (Mar) 0.3% 0.1%
12:30 CA Emloyment Change (Mar) 18.8 15.4
12:30 CA Unemployment Rate (Mar) 5.8% 5.8%
14:00 CA Ivey PMI (Mar) 60.2 59.6
15:15 UK BoE Gov Carney Speaks    
17:30 US Fed Chair Powell Speaks    


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