A mixed Dollar as focus turns to NFP

The final Manufacturing PMIs, including Japan, Australia, and China, are due. The key focus will be on the US Nonfarm Payrolls report. Additionally, the US ISM Manufacturing PMI will be released. Canada will also report GDP data.

Here is what you need to know on Friday, September 1:

On the first day of the new month, the primary focus will be on the US official employment report. Nonfarm Payrolls are expected to show a 170,000 increase in jobs, while the Unemployment Rate is anticipated to remain at 3.5%. Following the release of the NFP, the ISM Manufacturing PMI will be published, with an expected rebound from 46.4 to 47.

Nonfarm Payrolls Preview: Four scenarios for a jobs report set to test US economic resilience

Data released on Thursday showed that Initial Jobless Claims declined to 228,000, below the expected 232,000, marking the lowest reading in four weeks. However, Continuing Claims rose to the highest level in six weeks. The Core Personal Consumption Expenditure Price Index, a highlight of the day, showed an increase in the annual rate from 4.1% to 4.2% in July, in line with expectations. These figures did not have a significant impact on the market. The US Dollar made modest gains.

The US Dollar posted mixed results, as it rose against its main European rivals but weakened against the Yen. It ended the day flat against the AUD and NZD. The Canadian Dollar outperformed. The US Dollar Index (DXY) rebounded from 103.00 and moved back above 103.50.

US Treasury yields declined again but at a modest pace. The 10-year yield hit a fresh two-week low at 4.07% before rebounding to 4.11%.

The Euro lagged on Thursday, despite softer inflation figures and expectations regarding tightening from the European Central Bank (ECB). The upcoming ECB meeting appears to be a close call. EUR/USD failed to hold above 1.0900 and finished below 1.0850. EUR/GBP fell for the second consecutive day, approaching 0.8550.

“No room for complacency on inflation,” said Bank of England Chief Economist Huw Pill. Depository rising against the Euro, the Pound lost ground versus the US Dollar, causing GBP/USD to slide below 1.2700. The pair offers no clear signs regarding its future direction.

USD/JPY reached weekly lows below 145.50, influenced by US yields remaining near recent lows and US stocks failing to sustain in positive territory.

On Thursday, USD/CHF experienced a significant surge, bouncing back from its weekly lows and rising above the 0.8800 level. On Friday, Switzerland will release the August Consumer Price Index (CPI).

USD/CAD declined for the fourth consecutive day and tested the 20-day Simple Moving Average around 1.3500. If consolidation occurs below that level, it could open the door for further losses. Canada is scheduled to report June and Q2 GDP growth figures.

Analysts at TD Securities on Canada GDP: 

Q2 GDP growth is forecast to slow to 1.2%, giving the BoC more evidence that higher rates are working to slow demand. Household goods consumption will provide the main catalyst for the slowdown, while softer construction and net exports should also weigh on growth. We also look for GDP to decline by 0.1% in June, with new flash estimates pointing to another muted performance in July.

NZD/USD has been trading sideways below 0.6000 and the 20-day Simple Moving Average (SMA). The pair currently holds a neutral outlook in the short-term, with key support seen at 0.5900.

AUD/USD posted another daily close around 0.6470, slightly above the 20-day Simple Moving Average (SMA) for the second consecutive day. The pair currently maintains a modest bullish bias. However, to further solidify this outlook, it needs to hold above the key level of 0.6500.

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