FX Today: Focus shifts to the US labour market; the PBoC should stay on hold

The US Dollar (USD) added to the ongoing recovery, hitting new multi-day highs and surpassing its critical 200-day SMA despite declining US Treasury yields and amid rising caution prior to the release of Thursday’s Nonfarm Payrolls (NFP).

Here’s what to watch on Thursday, November 20:

The US Dollar Index (DXY) clocked its fourth consecutive day of gains on Wednesday, advancing past the psychological 100.00 hurdle as market participants assessed the latest FOMC Minutes and geared up for the upcoming US jobs report. The October’s Nonfarm Payrolls will take centre stage, seconded by the Philly Fed Manufacturing Index, Existing Home Sales, and the speeches by the Fed’s Hammack and Cook.

EUR/USD lost further impulse and receded to multi-day troughs in the 1.1540-1.1530 band on the back of the persistent risk-off mood. Germany’s Producer Prices are due, followed by the EMU’s Construction Output and the flash Consumer Confidence gauge. In addition, the ECB’s Buch is expected to speak.

GBP/USD came under extra downside pressure, breaking below the key 1.3100 support and reaching two-week lows after softer UK CPI data opened the door to further easing by the BoE in December. Next on tap on the UK docket will be the CBI Industrial Trends Orders

There was no stopping for the sharp march north in USD/JPY, this time largely surpassing the 156.00 hurdle for the first time since late January. The weekly Foreign Bond Investment figures are due, followed by the speak by the BoJ’s Koeda.

AUD/USD maintained its choppiness well in place, reversing Tuesday’s uptick and resuming its decline to levels well south of the 0.6500 support on Wednesday. The speeches by the RBA’s Connolly and Hunter will be the only events in Oz in an otherwise empty calendar.

In the central banks’ chapter, the PBoC is widely anticipated to keep its One-Year and Five-Year Loan Prime Rate (LPR) unchanged at 3.00% and 3.50%, respectively, at its meeting on Thursday. In the meantime, USD/CNH advances for the fourth day in a row, regaining traction and surpassing the 7.1200 level following last week’s monthly lows near 7.0900

Prices of the American WTI dropped markedly on Wednesday, breaking below the $59.00 mark per barrel on oversupply concerns, although geopolitical tensions from the Russia-Ukraine front seem to have mitigated the decline for now.

Gold extended further its Tuesday’s rebound, exceeding the $4,100 mark per troy ounce amid shrinking US Treasury yields and despite extra gains in the US Dollar. Silver prices followed suit, breaking above the $52.00 mark per ounce to reach fresh three-day peaks.