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Forex Market Majors Trade Lower on Dollar Strength Awaiting Job Numbers

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  • Both EUR & GBP at Lows Against USD
  • Hopeful NFP Numbers Expected
  • Equity Futures Slide After Sell-Off

With US employment data due early in the day, the forex market major currency both Pound and Euro are trading lower and close to their low point for 2021 so far. This comes at a time when the US Dollar is getting stronger for a variety of reasons not least the stock market sell-off yesterday in what has been a turbulent week for Wall Street. The futures market is also showing that a further day of selling could be ahead.

Currencies Touch Yearly Lows

Those forex trading the Euro and Pound have been greeted by weakness in today’s session as both major currencies moved close to their lowest points of the year. Both are hurting for much the same reason as the rest of the market with the overriding theme being comments made yesterday by Federal Reserve Chair Jerome Powell. His comments that rising bond yields had caught his attention stimulated a broad selling movement in the market yesterday and pushed the USD back to some strength which it has easily picked up.

The Euro is currently trading below $1.195 and at its lowest levels since the turn of the year while Sterling is closely following suit and threatening to dip below $1.38 after a prior period of strength. Even though the UK has done well domestically with their new budget being welcomed, and the vaccination rollout going very well, they will have nothing to stand up to Dollar power should it continue.

Employment Numbers Set for Boost

US nonfarm payroll numbers are due for release early this morning from the Labor Department. Analysts expect these numbers to be largely positive and show a gain of somewhere around 200,000 jobs for the month of February. This would be a significant increase on the January figures of 49,000 while the unemployment rate is expected to remain unchanged at 6.3%.

These numbers are probably more important today than at any other stage of the economic recovery to date. With treasury yields rising yesterday to spook the stock market and boost the Dollar, a strong beat on this number, which means adding more than 200,000 jobs, could further intensify the market fears of inflation, while a miss could perversely see markets rise.

Futures Market Slow After Rollercoaster Week

After a positive start to the day yesterday, forex brokers noticed a strong move toward the USD, and equities markets on Wall Street dipped strongly on the back of Jerome Powell’s comments that there could be some upward price pressure. This was in marked contrast to his previous movements to eliminate any fear of inflation.

Markets reacted and this seems to have pushed through to Friday with the futures markets still in the red on early trading. The major factor that will likely determine their direction and how the week finishes will come from the NFP numbers in the early morning.

 

Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

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