USD rally ahead of NFP

4 May, AtoZForex, Lagos – Big moves seen in the markets yesterday, most notable is the USD rally ahead of NFP across board. Having been in a nose dive for the past week or so. Commodities also fell as the greenback strengthened, with oil prices dipping to around $44 per barrel, and gold retreated from its 16 month high.

The AUDUSD pair was one of the biggest hit as the Aussie fell sharply, coupled with the dollar strength. The Reserve Bank of Australia (RBA) opted to cut rate further to a new record low, in a bid to fight disinflation and general ailing economic conditions. The Australian central bank reduced the cash rate by 25 basis points to 1.75 percent. This was quite expected, considering last week’s disappointing consumer price index data (CPI).

Another big day ahead, as we have key data due from UK, US and Canada.
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UK Construction PMI (8:30 A.M GMT)

The manufacturing PMI data released yesterday showed a fall below the critical 50.0 mark for the first time since March 2013. Coming at 49.2, as the headline index was dragged lower by sub-optimal trends in production and new orders and declines in both employment and stocks of purchases. We now look to the services PMI. Another disappointing release here will likely be a catalyst for further GBP losses, especially on the GBPUSD pair as the dollar has also found some recent strength.

USD rally ahead of NFP (12:15 P.M GMT)

Today, the coming data due from the US will be closely watched, after the big dollar rally yesterday. The ADP Non-Farm Employment Change is forecast to show a 205k change in the number of employed people during the previous month, excluding the farming industry and government. A potential increase from 200k recorded last month. The ISM Non-Manufacturing PMI is also forecast to show a higher sentiment towards the relative level of business conditions. All of these could contribute towards moving the dollar further bullish.

Canada trade balance (12:30 P.M GMT)

The Canadian dollar has been on a relentless bullish run against the USD this year so far. The CAD seems to be riding on the recent strengthening of oil prices. The trade balance is forecast to show a deficit of 1.2 billion. With recent dollar strength, a less than impressive trade balance will likely spur a rally in the USDCAD pair.

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