NFP on Good Friday will be watched closely by the market. A major currency pair moves within a very narrow band.
NFP in view restricts forex movements
Due to the fact that the world’s stock and bond markets are closed on Good Friday. The majority of currencies traded in incredibly narrow ranges on Friday. The Nonfarm Payrolls (NFP) data for March will be made public in the early US session.
The US Dollar Index, which analyzes the trend of the USD against a basket of six important currencies, finished level on Thursday. Although the major Wall Street indexes are able to make just minor gains for the day. The benchmark yield on the benchmark 10-year US Treasury bond rose to 3.3%, supporting the USD’s stability.
Forecast for the NFP report due today
After a better-than-anticipated increase of 311,000 in Feb, nonfarm payrolls are predicted to expand by 240,000 in March. The forecast rate of joblessness is 3.6%. While the projected yearly wage inflation, as expressed in average hourly earnings, is projected to decrease to 4.3% from 4.6 percent.
US dollar Scenarios in light of the NFP data
- The US is predicted by analysts to reveal a 240,000 employment rise in February, which would be good news for the USD.
- Investors are worried about sharply slower growth, which would have a negative impact on the USD. Yet lower salaries might change the situation.
- A startling job loss would set off safe-haven movements that would boost the USD relative to practically all other currencies.
The correlations are shifting; with every negative news item. The US Dollar draws money because traders are more concerned about a recession than they’re about interest rate increases. Even though the new response system for the Greenback may appear illogical. Stock markets appear to make more sense. Stocks decline as a result of bad economic news for the US
Fed policymakers are likely to choose to increase interest rates at the May meeting and leave them at high levels. If the NFP simply fulfills these forecasts. In the event that the report defeats analysts for the 12th time in a row, Fed forecasts would increase even more.
Good news for US employees is also positive for the US dollar, which would see demand connected to rates and their impact on the economy. That would occur in spite of labor market data showing no immediate impact of the financial crisis on the economy.
What if NFP is less robust?
The US economy is faltering, and the Fed will likely be hard to ignore this fact. When the NFP reports anemic employment growth of no more than 150,000 positions. Stability in prices and full labor are the two responsibilities of the central bank. Reduced interest rate expectations would be bad for the US dollar and positive for equities. In this situation, there is still something else to take into account.
Another possibility is slower employment growth but persistent, rapid pay rise. The threat of rising rates caused headlines to shout “stagflation,” driving markets down and the US dollar up.
What is your opinion?
