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What’s happening: The US dollar came under pressure following the release of jobs data.
What happened: The US dollar lost ground versus various currencies after April’s jobs gains came in better than market expectations.
However, the greenback remained stronger against one of the major currencies.
Why it matters: The US dollar has declined from its 20-year highs achieved during September 2022, with rising speculations of the Federal Reserve nearing the end of its policy tightening cycle. Meanwhile, peers including the ECB (European Central Bank) have adopted a more hawkish stance.
The Fed raised its benchmark interest rates by 25 basis points to 5% to 5.25% last week. Investors now expect the US central bank to begin lowering interest rates during the second half of the year. Traders are seeing cuts of 75 basis points by yearend.
On Friday, the US Labor Department said employers in the country had unexpectedly added 253,000 jobs in April, surpassing market estimates of 180,000. US average hourly earnings increased at an annual rate of 4.4% last month, versus a 4.3% rise in the previous month. The figure also came in above expert projections of 4.2%.
The unemployment rate eased to 3.4% in April, from a 50 year low of 3.4% recorded in January.
However, March’s data was revised lower to show an addition of only 165,000 jobs, instead of an initial figure of 236,000.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, surged to a session high of 101.77 on Friday before declining to 101.28, down 0.12% on the day.
The EUR/USD forex pair added 0.05% to reach 1.1018, after falling to 1.0967 earlier in the session. Despite weakness in the US dollar, the USD/JPY gained 0.42% to 134.86 on Friday.
Wall Street stocks also recorded sharp gains, with the Dow Jones adding more than 500 points and the Nasdaq 100 rising 2.1%.
What to watch: Markets will watch the US consumer price data, scheduled for release on Wednesday. The annual inflation rate, which eased for the ninth straight month to 5% in March, is expected to slow further to 4.9% in April.
Data on wholesale inventories and consumer inflation expectations for the year ahead, due for release today, will also remain in focus.
Context: The world’s largest cryptocurrency traded close to the $29,000 resistance last week.
Details: There were no significant changes in the broader crypto market last week, keeping the total market valuation broadly unchanged from the previous week, despite some volatility.
Crypto traders responded to the US Federal Reserve raising interest rates by 25 bps on Wednesday, which lent support to the US dollar. Bitcoin dipped toward $27,500 during the middle of the week but recovered after that.
Disappointing results by several US companies last week hit risk sentiment and kept the pressure on cryptocurrencies.
Bitcoin made several attempts to breach the closely watched $30,000 mark but could not succeed. The crypto king climbed close to $29,000 on Friday, where it was seven trading days earlier.
Ethereum, the second most popular token, breached the $1,900 resistance level on Friday, gaining around 3% last week.
What are expectations: Traders will keep an eye on comments from central bank officials regarding their monetary policy. Any renewed concerns around the banking sector could again lend support to cryptocurrencies.
Other Markets: European indices closed higher on Friday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.98%, 1.44%, 1.26% and 1.08%, respectively.
Ukraine accused Russia of using phosphorus munitions for attacking the besieged city of Bakhmut. The news sent the safe-haven US dollar slightly higher this morning.
Australia’s NAB business confidence index rose 1 point to 0 in April, the strongest reading since January, which lent support to the AUD/USD forex pair.
Saudi Arabia’s economy grew by 3.9% year-over-year in the first quarter, slowing from a 5.5% expansion in the prior period. The news sent the SAR/USD pair lower in forex trading this morning.
Japan’s au Jibun Bank services PMI rose to a record high of 55.4 in April, versus a flash reading of 55.0, lending support to the JPY/USD forex pair.
The Philippines reported a decline in its unemployment rate to 4.7% in March, from 5.8% in the year-ago month. The news sent the PHP/USD pair lower in forex trading this morning.
Germany’s industrial production, South Africa’s foreign exchange reserves, Singapore’s foreign exchange reserves, Brazil’s auto industry production, new vehicle sales and central bank of Brazil focus market readout, Turkey’s treasury cash balance, China’s foreign exchange reserves, as well as Spain’s consumer confidence indicator.
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