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Nonfarm Payrolls forecast: US job growth expected to slow in January amid Fed uncertainty

  • US Nonfarm Payrolls are set to increase by 170K in January after reporting 256K in December.
  • The United States Bureau of Labor Statistics will publish the jobs data on Friday at 13:30 GMT.
  • US labor data could offer fresh direction on the Fed interest rates and the US Dollar.

The United States (US) Bureau of Labor Statistics (BLS) will publish the all-important Nonfarm Payrolls (NFP) data for January on Friday at 13:30 GMT.

Amid lingering inflationary concerns under Donald Trump’s presidency, the January jobs report will be closely scrutinized to gauge the US Federal Reserve’s (Fed) interest rate outlook and the US Dollar (USD) performance in the near term.

Trump’s tariff war is seen as inflationary, calling for higher rates.

What to expect from the next Nonfarm Payrolls report?

Economists expect the Nonfarm Payrolls to increase by 170,000 jobs in January, following a 256,000 job gain in December. The Unemployment Rate (UE) is likely to stay at 4.1% in the same period.

Meanwhile, Average Hourly Earnings (AHE), a closely-watched measure of wage inflation, are expected to rise by 3.8% year-over-year (YoY) in January, compared with December’s 3.9% growth.

Following the January policy meeting, the Fed held the benchmark policy rate in the 4.25%-4.50% target range but altered the language in the policy statement to a slightly hawkish tone. The US central bank removed the earlier statement saying that inflation “has made progress” towards its 2% inflation goal while noting only the pace of price increases “remains elevated.”

Fed Chairman Jerome Powell, in his post-policy press conference, stated that the Fed wants to see further progress on inflation and could see a pathway for that, adding, “we don’t need to be in a hurry to make any adjustments.”

Despite the hawkish hold, markets continue expecting 46.3 basis points (bps) of Fed rate cuts by December, according to LSEG data, with a quarter-point reduction fully priced for July. Therefore, the January jobs data hold the key to affirming the strength of the US labor market, which will likely have a strong bearing on the Fed rate cut expectations for this year.

Previewing the January employment situation report, TD Securities analysts said: “Payrolls are set to lose momentum at the start of 2025, with temporary shocks helping to keep the headline gain under the 200K mark.”

“The UE rate likely stayed unchanged at 4.1%. The BLS will also unveil material revisions for payrolls and household employment data,” they added.

How will US January Nonfarm Payrolls affect EUR/USD?

The US economic data releases are back in focus as trade war fears take a back seat for now, reflective of the ongoing decline in the US Dollar due to its reduced appeal as a safe-haven asset.

Earlier in the week, the BLS reported that the JOLTS Job Openings dropped to 7.6 million in December, down nearly half a million from November’s 8.1 million. The Automatic Data Processing (ADP) announced on Wednesday that employment in the US private sector grew by 183,000 jobs last month, more than the estimated 150,000 and December’s 176,000 jobs creation.

The mixed US employment data failed to offer any comfort to the Greenback heading into Friday’s NFP release.

If the headline NFP figure shows a payroll growth below 150,000, the US Dollar downtrend could gain traction with the initial reaction to the data. Disappointing headline NFP print could revive dovish Fed expectations. In such a scenario, EUR/USD could swing back higher to the 1.0500 neighborhood.

On the other hand, an upside surprise to the NFP and wage inflation data could affirm the Fed’s hawkish tone, fuelling a fresh recovery in the USD while driving the EUR/USD pair back toward 1.0250.

Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for EUR/USD:

“The EUR/USD turnaround from three-week lows of 1.0210 appears capped by the 50-day Simple Moving Averages (SMA) at 1.0408 in the countdown to the NFP showdown. Meanwhile, the 14-day Relative Strength Index (RSI) challenges the 50 level from above. These technical indicators suggest that the pair could resume its downside in the near term.”

“Buyers need a decisive break above the January 30 high of 1.0468 to target the 1.0500 key level. Acceptance above that level is critical to unleashing further recovery toward the static resistance near 1.0535. Conversely, if EUR/USD yields a sustained break of the 1.0300 mark, sellers will then aim for the three-week troughs just above 1.0200.”

Economic Indicator

Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months’ reviews ​and the Unemployment Rate are as relevant as the headline figure. The market’s reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Read more.

Next release: Fri Feb 07, 2025 13:30

Frequency: Monthly

Consensus: 170K

Previous: 256K

Source: US Bureau of Labor Statistics

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.

Employment FAQs

Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.

The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.

The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.

By |2025-02-10T06:09:04+05:30February 10, 2025 6:09 am|Forex|Comments Off on Nonfarm Payrolls forecast: US job growth expected to slow in January amid Fed uncertainty
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EUR/USD weakens below 1.0400 as traders await US NFP release

  • EUR/USD softens to around 1.0375 in Friday’s Asian session. 
  • Trump’s tariff threats weigh on the shared currency. 
  • US January employment data will be the highlights later on Friday. 

The EUR/USD pair trades on a softer note around 1.0375 during the Asian session on Friday. The uncertainty surrounding US trade policy and the risk-off sentiment weigh on the Euro (EUR). Traders will keep an eye on the German Industrial Production ahead of US Nonfarm Payrolls (NFP) on Friday.

US President Donald Trump appeared to be using tariff threats towards the EU, calling the trade balance an “atrocity” and vowing that tariffs “will definitely happen.” EU leaders have promised to retaliate if Trump goes ahead with tariffs. The European Central Bank (ECB) policymaker Piero Cipollone said the central bank is set to cut interest rates further as inflation eases and warns that the trade war tensions could have a negative impact on the 20-nation eurozone. The escalating trade tensions might drag the shared currency lower against the US Dollar (USD).

Across the pond, the hawkish comments from US Federal Reserve (Fed) officials provide some support to the Greenback. Chicago Fed President Austan Goolsbee stated on Thursday that the uncertainty makes the environment for the Fed foggier, a reason to slow the pace of cuts. Meanwhile, Dallas Fed President Lorie Logan said that while inflation progress has been significant, the US labor market remains far too firm to push the Fed into rate cuts any time soon.

Economists expect the US economy to have added around 170,000 jobs in January, compared to the 256,000 gain in December. The unemployment rate is estimated to hold steady at 4.1%, suggesting continued resilience in the labour market despite recent economic headwinds. The Average Hourly Earnings are expected to ease to 3.8% YoY in January from 3.9% prior. If the reports show a weaker-than-expected outcome, this could exert some selling pressure on the USD and create a tailwind for the major pair.

Euro FAQs

The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

By |2025-02-10T06:07:45+05:30February 10, 2025 6:07 am|Forex|Comments Off on EUR/USD weakens below 1.0400 as traders await US NFP release
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US Dollar Price Forecast: Could test nine-day EMA barrier near 108.00

  • The US Dollar Index may find its initial resistance at the nine-day EMA at 107.94.
  • A successful break above the 50 mark would confirm the emergence of a bullish bias.
  • The immediate support appears around the descending channel’s upper boundary at 107.30 level.

The US Dollar Index (DXY) continues its upward momentum for the second consecutive day, trading around 107.80 during Asian hours on Friday. A review of the daily chart suggests a weakening bearish bias as the index consolidates above the descending channel pattern.

The 14-day Relative Strength Index (RSI) remains just below the 50 level, indicating that bearish sentiment is still present. A decisive move above the 50 mark would confirm a shift from a bearish to a bullish bias. Furthermore, the US Dollar Index remains below its nine- and 14-day Exponential Moving Averages (EMAs), signaling weaker short-term price momentum.

On the downside, the upper boundary of the descending channel serves as the key support near 107.30, followed by the two-month low of 106.97, which was recorded on January 27. A drop below the latter could strengthen the bearish bias, pushing the index toward the lower boundary of the descending channel at 105.60.

Regarding resistance, the DXY may first challenge the nine-day EMA at 107.94, followed by the 14-day EMA at 108.03. A breakout above these levels could enhance short-term price momentum, potentially driving the index toward its three-week high of 109.80, last tested on February 3.

US Dollar Index: Daily Chart

By |2025-02-10T06:06:34+05:30February 10, 2025 6:06 am|Forex|Comments Off on US Dollar Price Forecast: Could test nine-day EMA barrier near 108.00
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EUR/JPY struggles to build on its recovery from multi-month low beyond mid-157.00s

  • EUR/JPY rebounds over 80 pips from a multi-month low touched earlier this Friday.
  • IMF’s warning of spillovers from rising foreign market volatility weighs on the JPY.
  • The divergent BoJ-ECB policy outlook keeps a lid on any further gains for the cross.

The EUR/JPY cross stages a goodish intraday recovery from the 156.75 area, or its lowest level since early December touched earlier this Friday and for now, seems to have snapped a two-day losing streak. The momentum lifts spot prices back above mid-157.00s during the Asian session and is sponsored by the emergence of some selling around the Japanese Yen (JPY).

A senior International Monetary Fund official said on Friday that Japan’s services inflation remains below the 2% target, which is why it remains appropriate for the Bank of Japan (BoJ) to maintain accommodative monetary policy. This, in turn, weighs on the JPY and assists the EUR/JPY cross to rebound around 85 pips from the daily low. That said, the growing acceptance that the BoJ will maintain its stance to steadily push up borrowing costs helps limit any further JPY depreciation.

In fact, Kazuhiro Masaki, Director General of the BoJ’s monetary affairs department, said on Thursday that the central bank will continue to raise interest rates if underlying inflation accelerates toward its 2% target as projected. This marks a big divergence in comparison to the European Central Bank’s (ECB) dovish stance. Adding to this concerns that US President Donald Trump would slap tariffs on goods from the European Union undermine the Euro and cap the EUR/JPY cross.

Hence, it will be prudent to wait for strong follow-through buying before confirming that spot prices have formed a near-term bottom and positioning for any further appreciating move. Even from a technical perspective, the recent repeated failures near the very important 200-day Simple Moving Average (SMA) and a subsequent decline below the 160.00 psychological mark confirmed a bearish multiple-top breakdown, suggesting that the attempted recovery is likely to get sold into.

Euro FAQs

The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

By |2025-02-10T06:04:50+05:30February 10, 2025 6:04 am|Forex|Comments Off on EUR/JPY struggles to build on its recovery from multi-month low beyond mid-157.00s
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EUR/GBP rises to near 0.8350, upside seems limited due to potential Trump’s tariffs on EU

  • EUR/GBP gains ground due to the increased likelihood of more BoE rate cuts in 2025.
  • BoE’s Bailey signaled additional rate cuts with the market expecting two or three more cuts throughout the year.
  • Trump described the trade imbalance between the US and the EU as an “atrocity,” insisting that tariffs “will definitely happen.”

EUR/GBP continues its upward trajectory for the fourth consecutive day, trading around 0.8350 during Friday’s Asian session. The pair strengthened as the Pound Sterling (GBP) came under pressure following the Bank of England’s (BoE) 25 basis point interest rate cut on Thursday.

The British Pound may face further downside as BoE Governor Andrew Bailey signaled the likelihood of additional rate cuts this year. Market expectations suggest the central bank could implement two or three more cuts throughout the year.

All nine members of the Monetary Policy Committee (MPC) supported a rate cut, with seven voting for a 25 bps reduction, while two more dovish members pushed for a more aggressive 50 bps cut. The policymakers’ urgency in delivering a February rate cut highlights their stance on monetary easing.

However, EUR/GBP’s upside potential could be capped due to increasing risks of US President Donald Trump imposing tariffs on the EU. Trump described the trade imbalance as an “atrocity,” insisting that tariffs “will definitely happen.” In response, EU leaders have pledged to retaliate if the tariffs materialize.

Traders anticipate the European Central Bank (ECB) will continue its gradual approach to lowering interest rates. Last week, the ECB reduced its Deposit Facility rate by 25 basis points (bps) to 2.75%, with officials signaling the likelihood of further cuts this year.

On Wednesday, ECB policymaker and Bank of Portugal Governor Mario Centeno told Reuters that maintaining a downward trajectory for interest rates is “pretty clear.” While Centeno did not specify the exact pace of policy easing, he emphasized the need to reach a neutral rate “sooner rather than later.”

Tariffs FAQs

Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.

Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.

There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.

During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.

By |2025-02-10T06:03:46+05:30February 10, 2025 6:03 am|Forex|Comments Off on EUR/GBP rises to near 0.8350, upside seems limited due to potential Trump’s tariffs on EU
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USD/CHF attracts some buyers above 0.9050, US NFP data looms

  • USD/CHF drifts higher to around 0.9060 in Friday’s early European session, adding 0.17% on the day. 
  • Investors brace for the US January employment report, which is due later on Friday. 
  • Escalating Middle East geopolitical tensions could boost the safe-haven flows, benefiting the CHF. 

The USD/CHF pair gains traction to near 0.9060 during the early European session on Friday. The renewed US Dollar (USD) demand provides some support to the pair. Later on Friday, the US employment data for January will take center stage.

Despite the hawkish hold, LSEG statistics showed that markets continue to expect 46.3 basis points (bps) of Federal Reserve (Fed) rate reductions by December, with a quarter-point cut fully priced for July. The US January labor market data will be the highlight later on Friday as it might offer some hint about a US interest rate outlook. The weaker NFP report could trigger dovish Fed expectations, undermining the Greenback. On the other hand, the upside surprise outcome could affirm the Fed’s hawkish tone and could lift the USD broadly.

The Middle East and Europe condemn Trump’s plans to take over Gaza. On Thursday, Trump said that Israel would hand over Gaza to the United States after the fighting was over and the enclave’s population was already resettled elsewhere, which he said meant no US troops would be needed on the ground. Investors will closely monitor the development of surrounding geopolitical risk in the Middle East.

“What Trump is proposing is clearly catastrophic for Gaza, but it would also be destabilising for the countries in the region,” Hugh Lovatt, a researcher at the European Council on Foreign Relations (ECFR), tells Euronews. Any sign of escalating tensions could boost the safe-haven currency like the Swiss Franc (CHF).

Swiss Franc FAQs

The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.

The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.

The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.

Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.

As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.

By |2025-02-10T06:02:58+05:30February 10, 2025 6:02 am|Forex|Comments Off on USD/CHF attracts some buyers above 0.9050, US NFP data looms
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FX option expiries for Feb 7 NY cut

FX option expiries for Feb 7 NY cut at 10:00 Eastern Time via DTCC can be found below.

EUR/USD: EUR amounts

  • 1.0225 1.6b
  • 1.0250 848m
  • 1.0300 874m
  • 1.0350 814m
  • 1.0400 2.5b
  • 1.0500 950m

GBP/USD: GBP amounts

  • 1.2300 1b
  • 1.2350 561m

USD/JPY: USD amounts

  • 151.00 606m
  • 153.00 787m
  • 153.50 1.2b
  • 154.00 748m

USD/CHF: USD amounts

  • 0.9160 485m

AUD/USD: AUD amounts

  • 0.6200 802m
  • 0.6455 805m

USD/CAD: USD amounts

  • 1.4155 750m
  • 1.4250 867m
  • 1.4310 1.2b
  • 1.4355 1b
  • 1.4365 860m
  • 1.4375 1.7b
  • 1.4500 836m
  • 1.4600 2.1b

EUR/GBP: EUR amounts

  • 0.8400 400m
By |2025-02-10T05:59:13+05:30February 10, 2025 5:59 am|Forex|Comments Off on FX option expiries for Feb 7 NY cut
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AUD/JPY rebounds above 95.00 as Japanese Yen weakens following remarks from IMF

  • AUD/JPY trims its daily losses following the cautious remarks from the International Monetary Fund on Friday.
  • The IMF cautioned that Japan should stay vigilant against potential spillover effects stemming from increased volatility in global markets.
  • The AUD could face challenges due to the dovish mood surrounding the RBA’s policy outlook.

AUD/JPY remains subdued for the third consecutive day, hovering around 95.20 during Asian trading hours on Friday. The downside for AUD/JPY cross halts as the Japanese Yen (JPY) softens following cautious remarks from the International Monetary Fund (IMF) on Friday. The IMF warned that Japan should remain alert to potential spillover effects from rising volatility in global markets, which could impact liquidity conditions for its financial institutions.

Additionally, the IMF cautioned that Japan must closely monitor risks associated with the Bank of Japan’s rate hikes, including rising government debt-servicing costs and a potential uptick in corporate bankruptcies.

The AUD/JPY cross faces downside pressure as the Australian Dollar (AUD) weakens amid dovish sentiment surrounding the Reserve Bank of Australia’s (RBA) policy outlook. Market expectations now place a 95% probability of an RBA rate cut from 4.35% to 4.10% in February.

The Australian central bank has maintained the Official Cash Rate (OCR) at 4.35% since November 2023, emphasizing that inflation must “sustainably” return to its 2%-3% target range before any policy easing is considered.

Additional pressure on the AUD stems from ongoing trade tensions between the United States (US) and China, Australia’s key trading partner. In response to the new 10% US tariff that took effect on Tuesday, China’s Commerce Ministry announced a 15% tariff on US coal and liquefied natural gas (LNG) imports, along with an additional 10% tariff on crude Oil, farm equipment, and certain automobiles. However, optimism over easing trade tensions lingers as US President Donald Trump and Chinese President Xi Jinping are set to discuss potential tariff rollbacks, per Reuters.

Interest rates FAQs

Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.

Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.

Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.

The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.

By |2025-02-10T05:58:21+05:30February 10, 2025 5:58 am|Forex|Comments Off on AUD/JPY rebounds above 95.00 as Japanese Yen weakens following remarks from IMF
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Forex Today: January Nonfarm Payrolls data to trigger next big market reaction

Here is what you need to know on Friday, February 7:

The trading action in financial markets turns subdued early Friday as investors move to the sidelines ahead of key macroeconomic data releases. The US Bureau of Labor Statistics will publish January employment report, which will feature Nonfarm Payrolls, Unemployment Rate and wage inflation figures. Labor market data from Canada and comments from central bank officials will also be watched closely by participants.

Related news

  • Nonfarm Payrolls forecast: US job growth expected to slow in January amid Fed uncertainty
  • What is NFP and how does it affect the Forex market?
  • US January Nonfarm Payrolls Preview: Analyzing Gold price reaction to NFP surprises

The US Dollar (USD) Index closed marginally higher on Thursday, supported by the cautious market stance. In the European morning on Friday, the index fluctuates in a narrow range below 108.00. Nonfarm Payrolls in the US are forecast to rise by 170,000 and the Unemployment Rate is seen holding steady at 4.1% in January.

US Dollar PRICE This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Canadian Dollar.

USD EUR GBP JPY CAD AUD NZD CHF
USD -0.11% -0.23% -2.02% -2.60% -1.15% -1.43% -0.98%
EUR 0.11% 0.28% -0.63% -1.21% -0.58% -0.03% 0.42%
GBP 0.23% -0.28% -1.98% -1.49% -0.85% -0.31% 0.15%
JPY 2.02% 0.63% 1.98% -0.58% 1.05% 1.53% 1.70%
CAD 2.60% 1.21% 1.49% 0.58% 0.39% 1.20% 1.66%
AUD 1.15% 0.58% 0.85% -1.05% -0.39% 0.55% 1.01%
NZD 1.43% 0.03% 0.31% -1.53% -1.20% -0.55% 0.45%
CHF 0.98% -0.42% -0.15% -1.70% -1.66% -1.01% -0.45%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

 

Mexico’s central bank, the Banco de Mexico (Banxico), announced late Thursday that it lowered interest rates by 50 basis points (bps), as anticipated. The decision, however, was not unanimous as Deputy Governor Jonathan Heath voted for a 25 bps rate cut. USD/MXN edged lower and closed in negative territory on Thursday before stabilizing slightly above 20.45 on Friday.

EUR/USD snapped a three-day winning streak on Thursday, pressured by the broad USD resilience. Early Friday, the pair trades sideways below 1.0400. European Central Bank Vice President Luis de Guindos is scheduled to speak later in the European session.

The Bank of England lowered the policy rate by 25 bps to 4.5% after the February meeting, in a widely expected decision. Policymakers voted 7-2 in favor of the 25 bps cut. External Monetary Policy Committee (MPC) members Dhingra and Mann voted to cut rates by 50 bps. In the post-meeting press conference, “we expect to be able to cut bank rate further but we will have to judge meeting by meeting how far and how fast,” BoE Governor Andrew Bailey said. GBP/USD lost more than 0.5% on Thursday but managed to stabilize above 1.2400 early Friday.

Nada Choueiri, Deputy Director of the International Monetary Fund’s (IMF) Asia-Pacific Department and its mission chief for Japan, said on Friday that the Bank of Japan (BoJ) is likely to raise interest rates again this year. USD/JPY extended its weekly slide and touched its lowest level in nearly two months near 151.00 in the Asian session on Friday. The pair stages a rebound in the European morning and trades in positive territory above 151.50.

USD/CAD fluctuated in a narrow channel on Thursday and closed the day virtually unchanged. The pair struggles to find direction early Friday and moves up and down in a tight range above 1.4300. The Unemployment Rate in Canada is forecast to tick up to 6.8% from 6.7%.

Gold corrected lower on Thursday following a five-day rally that saw the price hit a record-high above $2,880 on Wednesday. XAU/USD stays relatively calm early Friday and trades near $2,860.

Nonfarm Payrolls FAQs

Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.

The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.

Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.

Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.

Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.

By |2025-02-10T05:57:14+05:30February 10, 2025 5:57 am|Forex|Comments Off on Forex Today: January Nonfarm Payrolls data to trigger next big market reaction
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NZD/USD softens below 0.5700 ahead of US NFP release

  • NZD/USD weakens to around 0.5670 in Friday’s early European session. 
  • The renewed trade war between the US and China spurs safe-haven demand and weighs on the China-proxy Kiwi. 
  • The US January NFP report will be in the spotlight later on Friday. 

The NZD/USD pair trades in a negative territory near 0.5670 during the early European trading hours on Friday, pressured by a modest rebound of the US Dollar (USD). Traders prefer to wait on the sidelines amid the uncertainty ahead of key US Nonfarm Payrolls (NFP) data.

Following China’s measured retaliation to US tariffs, President Donald Trump has said that he is not in a rush to talk with Chinese President Xi Jinping. On Tuesday, China’s finance ministry issued a package of tariffs on a variety of US items, including crude oil, agricultural equipment, and certain automobiles, in response to US President Donald Trump’s announcement of a 10% tariff on Chinese imports. Any signs of rising trade war tensions between the US and China could exert some selling pressure on the New Zealand Dollar (NZD), as China is a major trading partner to New Zealand.

The US Federal Reserve (Fed) signaled that it had no plans to cut interest rates quickly, amid uncertainty over sticky inflation and Trump’s policies. All eyes will be on the highly-anticipated US Nonfarm Payrolls on Friday for more cues about the US interest rate outlook. In case of a weaker-than-expected outcome, this could drag the USD lower broadly. Economists expect the US economy to have added around 170,000 jobs in January, while the unemployment rate is estimated to hold steady at 4.1%.

New Zealand Dollar FAQs

The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.

The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.

Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.

The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.

By |2025-02-10T05:54:59+05:30February 10, 2025 5:54 am|Forex|Comments Off on NZD/USD softens below 0.5700 ahead of US NFP release
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Sudhakar. Kalyan

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