Dollar Weakens Ahead of Jobs Report
U.S. dollar drifts lower:
The U.S. dollar saw a marginal decrease on Friday, with investors awaiting the monthly U.S. jobs report. The Japanese yen, on the other hand, is set for its best week in over a year.
Dollar on the defensive before payrolls:
This week, the dollar has been on the defensive following indications from Fed Chair Powell that rate cuts were more likely than hikes. Analysts at ING noted a bearish sentiment towards the dollar, with markets anticipating a potential cut in September.
Attention now shifts to the upcoming U.S. monthly employment report, with expectations for a job increase of 238,000 and a unemployment rate below 4%.
Powell emphasized the significance of economic data for future policy decisions after the Federal Reserve held interest rates steady earlier in the week. Markets are anticipating a potential easing cycle to begin in September.
Despite the focus on economic indicators, the Eurozone’s manufacturing sector remains weak, with Germany’s order books showing a decline in March.
The pound sterling, on the other hand, rose following a positive service industry report, potentially delaying interest rate cuts by the Bank of England.
Yen strengthens, Asian currencies rise:
The Japanese yen fell against other currencies, marking a substantial weekly loss. Japanese authorities intervened to support the yen this week amid thin liquidity in the market.
Asian currencies capitalized on a weaker dollar, with the Australian dollar strengthening after positive inflation readings reduced expectations of rate cuts by the Reserve Bank of Australia.
Overall, global currency markets are bracing for potential shifts based on upcoming economic data and central bank decisions.
