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US October jobs report to drive USD action ahead of weekend

November 3, 2023| Forex Market


Here is what you need to know on Friday, November 3:

The US Dollar (USD) continued to weaken against its rivals following mixed macroeconomic data releases from the US on Thursday, with the USD Index (DXY) losing 0.5% on the day. Early Friday, DXY holds steady at around 106.00 as investors await October labor market data, which will include Nonfarm Payrolls and wage inflation figures. The US economic docket will also feature ISM Services PMI report.

US NFP Forecast: Nonfarm Payrolls expected to slow sharply in October after September upside surprise.

The data from the US showed on Thursday that Unit Labor Costs declined by 0.8% on a quarterly basis in the third quarter, while the weekly Initial Jobless Claims rose to 217,000 from 212,000. On a positive note, Factory Orders increased by 2.8% on a monthly basis in September. The benchmark 10-year US Treasury bond yield fell more than 1% and dropped below 4.7%, putting additional weight on the USD’s shoulders. Meanwhile, Wall Street’s main indexes registered impressive gains¬†as risk flows continued to dominate the action. Early Friday, US stock index futures trade mixed.

Caixin Services PMI in China edged higher to 50.4 in October from 50.2 in September. In the meantime, the Australian Bureau of Statistics reported that Retail Sales grew 0.2% in the third quarter, following the 0.6% contraction recorded in the second quarter. AUD/USD largely ignored these data and the pair was last seen trading virtually unchanged on the day slightly below 0.6450.

Although EUR/USD erased a portion of its daily gains in the American session, it closed in positive territory on Thursday. In the European morning on Friday, the pair fluctuates in a narrow channel above 1.0600.

The Bank of England (BoE) left the policy rate unchanged at 5.25% as expected following the November policy meeting. Governor Andrew Bailey didn’t shut the door to another rate hike but adopted a relatively cautious regarding further tightening. GBP/USD benefited from broad USD weakness and climbed above 1.2200 on Thursday before going into a consolidation phase early¬†Friday.

USD/JPY continued to push lower amid retreating US yields and closed the second consecutive day in negative territory on Thursday. The pair stays on the back foot but holds above 150.00.

XAU/USD struggled to capitalize on the selling pressure surrounding the USD on Thursday and ended the day flat near $1,985. Gold stays directionless early Friday and moves up and down in a tight band below $1,990.

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