US Dollar Index (DXY) nudges up to 99.00 with markets bracing for the US NFP

• The Dollar trims previous losses ahead of the NFP reading.
• Investors are paring USD shorts after a string of negative US releases.
• A downbeat employment report would boost hopes of Fed easing.
  

The US Dollar Index (DXY) is showing a moderately positive tone on Friday, with investors trimming US Dollar lows ahead of May’s US Nonfarm Payrolls release. The DXY is nearing the 99.00 level, after hitting six-week lows, at 98.35 on Thursday, on track for a flat weekly performance.

Market forecasts anticipate a 130,000 increment on private payrolls in May, following a 177,000 rise in April, but the weak macroeconomic data seen earlier this week casts doubts about these figures.

The unemployment rate is expected to have remained steady at a 4.2% rate, but, according to some market sources, there is a chance of an increase to 4.3%, which would put additional pressure on the US Dollar.

Weak US Data has weighed on the USD

The USDollar suffered this week on the back of a string of downbeat economic releases, ISM PMI readings revealed contractions in both manufacturing and services sectors, suggesting a poor contribution to the Q2 GDP.

Beyond that, ADP figures revealed a much lower-than-expected increase in employment in May, which raised speculation that a 130K NFP forecast might be too optimistic.

Against this background, a weak employment report today might urge the Fed to end its wait-and-see stance and lower interest rates in the coming months. Such a scenario would push the Dollar lower against its main peers.