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Dollar weak heading into Nonfarm Payrolls release


What you need to know on Friday, May 9:

Comments from different Fed officials cooled down expectations for higher rates in the US, leading to persistent dollar’s weakness. The American currency fell against all of its major rivals, particularly weak against safe-haven rivals. Dallas Federal Reserve Bank President Robert Kaplan said that he would like to start talking about tapering sooner rather than later, but he is not a voting member.

Wall Street advanced, with the DJIA settling at record highs. European indexes were also up. US Treasury yields, on the other hand, eased, with the yield on the 10-year note down to 1.55%.

The shared currency advanced just modestly,  as EUR/USD settled at 1.2060, despite upbeat local data. The GBP/USD pair ended the day sub-1.3900 after the BOE failed to impress. The central bank left the benchmark interest rate unchanged at 0.10% and kept the Asset Purchase Facility steady at £895 billion as widely expected. The BOE also slowed the pace of weekly bond-buying and expects purchases to end around late 2021. Finally, policymakers upwardly revised growth and inflation forecasts, as they now expect the GDP to reach 7.25% in 2021 and 5.75% in 2022 and see 2021 inflation averaging 2.5%.

The AUD/USD pair nears the 0.7800 figure, while USD/CAD plunged to 1.2160. Gold soared to 1,818, its highest since last February, while crude oil prices eased, with WTI ending the day at $ 64.80 a barrel.

US employment-related data surprised to the upside. Challenger Job Cuts decreased to 22.913K in April, while Initial Jobless Claims for the week ended April 30 resulted in 498K, better than the 540K expected. Q1 Nonfarm Productivity increased 5.4%, while Unit Labor Cost in the same period declined by 0.3%. Data is relevant ahead of the US Nonfarm Payroll report to be out on Friday.

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