The dollar ended last week on a high note and with markets closed on Friday for the Easter holidays the US currency held on its gains to record a 1% gain for the week. Nevertheless, the 2 April US Dollar Trading Outlook shows that the greenback positively started the week ahead of Friday’s Non-Farm Payrolls report. What is more?
2 April, ADS Securities – Today the European markets will remain closed for Easter Monday, but action will start picking up the pace in the afternoon as the US exchanges start trading. The first 48 hours of trading will likely be eventless with no major news or reports pending for release which should keep the greenback supported.
2 April US Dollar Trading Outlook: Pre-NFP Report
The US ISM Manufacturing and PMI data will be released later today, but neither of them is considered market is moving even during periods of thin liquidity. Furthermore, expectations are set for a steady or marginally lower printing which will keep the current bullish bias for the Dollar in place.
The Non-Manufacturing ISM report on Wednesday is where things will start getting interesting, and of course, the Non-Farm Payrolls report on Friday will be the key event for the next few days.
Non-Farm Payrolls report Forecast
After last month’s impressive NFP printing analysts are predicting a softer reading this time around but the focus will again be on wage growth. We expect the weekly earnings’ figures to come in strong at 0.3% growth on a monthly basis which will push the yearly rate at 2.7% further supporting Fed’s bullish stance.
Upbeat expectations for Friday’s US report should provide further stimulus to the Dollar, and the Dollar/Yen is at the top of our watch-list this week.
The US/Japanese pair has come off its 104.50 lows on the back of the improvement in risk appetite with Kim Jong Un’s visit to China being the highlight.
The 107 peak on Wednesday brings to the foreground an interesting scenario as a sustained break above this key technical level would put a stop to the downtrend we’ve witnessed since late last year and will signal fresh Dollar gains. Tensions on a global scale have largely eased over the past few weeks and should this continue investors will look to take profits on their yen longs driving the Japanese currency lower.
Equities in Asia have started the week marginally above water with the Nikkei trading 0.3% in the green and with Europe closed for Easter Monday we will need to wait until the US session to get an indication for the next few days. The US futures are largely trending in negative territory with the Dow Jones and the S&P 500 expected to open around 0.25% lower.
Nevertheless, the broader sentiment remains positive as global risks have eased allowing traders to test the waters again. Gold bounced off the $1,325 base to trade $5 higher but the fundamental and technical outlooks suggest that another retest of this support is imminent as risk appetite is improving – $1,310 is the next support lower.
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