Markets are subdued early Friday before the US jobs report, with concerns over China’s economy and global tensions. The US Dollar Index (DXY) stays strong, heading for a sixth consecutive weekly gain, fueled by hawkish Fed signals. A dip in US job cuts and positive Fed comments boosted the Dollar on Thursday, even with partial closures of main bourses for President Carter's memorial.
The US Dollar's strength leads to four-day losses of EURUSD, GBPUSD, AUDUSD and NZDUSD, while USDJPY picks up bids to reverse the previous day’s losses. Further, USDCAD rises for the fourth consecutive day even as Crude Oil edges higher. Meanwhile, Gold ignores firmer USD and benefits from the market’s uncertainty to print a four-day uptrend while cryptocurrencies and the Asia-Pacific equities remain under pressure.
Hawkish comments from Fed officials and strong US employment clues keep the US Dollar firm, while major currencies struggle. EURUSD and GBPUSD saw significant drops, falling for four straight days, as EU retail sales slowed and Bank of England's (BoE) Sarah Breeden suggested easing policy. In Japan, rising salaries fueled the Bank of Japan’s (BoJ) rate hike concerns and triggered the USDJPY pair’s retreat on Thursday. However, broadly firmer US Dollar and softer prints of Japan’s Coincident and Leading Economic Indices for November renewed the Yen pair’s run-up early Friday.
The stronger US Dollar, cautious sentiment, and concerns over China keep commodity-linked currencies like AUD, NZD, and CAD under pressure ahead of US and Canada employment reports. AUDUSD and NZDUSD face a four-day losing streak, hitting multi-month lows, while USDCAD rises for the fourth day. The Loonie pair’s rally ignores higher Crude Oil prices, driven by political tensions in Canada and the Bank of Canada’s dovish stance.
Gold reinforces its haven status, supported by rising physical demand from India and China. Clues of increased stimulus from China, anxiety ahead of today’s key US data and uncertainties about central bank moves in 2025 also boost the yellow metal. As a result, XAUUSD rises for the fourth day, on track for its biggest weekly gain in seven, despite a stronger US Dollar.
Like Gold, Crude Oil brushes off the firmer US Dollar, aiming for weekly gains as hopes of rising energy demand from China’s stimulus and geopolitical tensions overshadow supply concerns.
Cryptocurrencies continue to correct, with Bitcoin (BTCUSD) and Ethereum (ETHUSD) falling for three straight days before trimming weekly losses early Friday. In doing so, the riskier assets appear to be positioning for a potential rally following Donald Trump’s inauguration.
With the US and Canada’s December job reports in focus, traders also watch the University of Michigan’s Consumer Sentiment Index and Inflation Expectations for January. Softer US employment data could trim the US Dollar’s weekly gains, potentially lifting Gold towards $2,700. However, major currencies and Antipodeans may remain under pressure. A stronger-than-expected jobs report could boost the US Dollar and dampen Gold’s appeal, while USDCAD may stay firm unless the data is exceptionally positive.
May the trading luck be with you!
