Forex Today: US Dollar extends slide ahead of NFP revisions
Here is what you need to know on Tuesday, September 9:
The US Dollar (USD) struggles to find demand early Tuesday after posting losses against its major rivals on Monday. Later in the day, NFIB Business Optimism Index for August will be featured in the US economic calendar. More importantly, the Bureau of Labor Statistics will publish the preliminary benchmark revisions to employment data.
US Dollar Price Last 7 Days
The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the weakest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.44% | -0.15% | -0.10% | 0.37% | -0.83% | -0.76% | -1.04% | |
| EUR | 0.44% | 0.28% | 0.36% | 0.82% | -0.34% | -0.32% | -0.60% | |
| GBP | 0.15% | -0.28% | 0.08% | 0.53% | -0.64% | -0.63% | -0.88% | |
| JPY | 0.10% | -0.36% | -0.08% | 0.45% | -0.75% | -0.66% | -0.92% | |
| CAD | -0.37% | -0.82% | -0.53% | -0.45% | -1.22% | -1.09% | -1.40% | |
| AUD | 0.83% | 0.34% | 0.64% | 0.75% | 1.22% | 0.05% | -0.23% | |
| NZD | 0.76% | 0.32% | 0.63% | 0.66% | 1.09% | -0.05% | -0.28% | |
| CHF | 1.04% | 0.60% | 0.88% | 0.92% | 1.40% | 0.23% | 0.28% |
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).
Growing expectations of the Federal Reserve (Fed) opting for multiple rate cuts this year weighed on the USD at the beginning of the week, with the USD Index losing 0.3% and posting its lowest daily close since late July on Monday. Meanwhile, Wall Street's main indexes edged higher to close the day with modest gains. Early Tuesday, US stock index futures trade in positive territory.
During the Asian trading hours, the data from Australia showed that Westpac Consumer Confidence slumped to -3.1% in September from 5.7% in August. Furthermore, National Australia Bank's Business Confidence Index dropped to 4 in August from 8 in July. After rising more than 0.5% on Monday, AUD/USD seems to have entered a consolidation phase at around 0.6600 on Tuesday.
French Prime Minister François Bayrou lost the confidence vote, as anticipated, on Monday. President Emmanuel Macron is expected to announce a replacement in the coming days. Despite the political turmoil in France, EUR/USD benefited from the broad-based selling pressure surrounding the USD and closed in positive territory on Monday. In the European session on Tuesday, the pair fluctuates in a narrow range above 1.1750.
Gold extended its rally on Monday and continued to stretch higher to touch a new record-high near $3,660 on Tuesday. XAU/USD corrects lower in the European morning and trades below $3,650.
GBP/USD registered modest gains on Monday, supported by the persistent USD weakness. The pair holds its ground and trades in positive territory above 1.3550 early Tuesday.
USD/JPY remains under bearish pressure and declines toward 147.00 in the European session on Tuesday. Japan's trade negotiator Ryosei Akazawa earlier in the day that US tariffs on Japanese goods, including cars and auto parts, are set to be lowered by September 16.
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.
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