Forex Today: Could Nonfarm Payroll figures save the US Dollar?

The Greenback bounced off its weekly lows of 98.35 as China’s media reported a call between US President Donald Trump and China’s President Xi Jinping. Both parties mentioned the call was good and focused on trade policies and rare earths. Eyes shift to May’s Nonfarm Payrolls figures, expected to show a slowdown in the US labor market.

Here's what to watch on Friday, June 6:

The US Dollar Index (DXY) remained on the back foot throughout the Asian and European sessions. However, an improvement in risk appetite due to easing US-Sino tensions capped the DXY’s decline, and it now sits at around 98.75, virtually unchanged. On Friday, Nonfarm Payrolls numbers are expected to dip in May from 177K in April. Further data suggests that the Unemployment Rate and Average Hourly Earnings are expected to remain unchanged compared to the previous month’s figures.

EUR/USD was boosted and seems poised to end Thursday’s session above 1.1400 as the ECB cut rates and hinted that the easing cycle could be paused. The docket will feature Retail Sales and Gross Domestic Product (GDP) figures for the Eurozone (EU), followed by Germany’s Trade Balance and Industrial Production. Traders would also assess ECB’s President Lagarde’s speech.

GBP/USD hit a new three-year high at 1.3616 on Thursday before retreating somewhat, boosted by the UK’s trade agreement with the US, which left steel and aluminum tariffs on UK products unchanged at 25%, as Trump doubled down duties to 50%, for the rest of the world. The schedule will feature Halifax House Prices, bill auctions, and BoE’s Chief Economist Pill speech.

Although the USD/JPY resumed its uptrend above 143.50, the recovery appears compromised as the correlation with the US 10-year Treasury yield remains tight. If traders reclaim 144.00, expect a leg-up. The Japanese docket will feature All Household Spending data, Foreign Reserves, and Leading Indicators.

AUD/USD rallied and tested May’s monthly high of 0.6537 but the move was quickly rejected as traders brace for an absent economic docket on Friday. Market participants’ mood would be the primary driver for the major.

Gold prices retreated as bulls took a breather, though uncertainty about US trade policies and heightened geopolitical tensions could drive XAU/USD prices higher. Bullion prices remain above $3,300, which is seen as a crucial support level for the last two weeks.