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USD dips to 6-week low after downbeat NFP report

Monday, November 06, 2023

Today’s headlines

What’s happening: The US dollar moved lower on Friday, following the release of jobs data for October.

What happened: The greenback declined to its lowest level since September 20, after data released on Friday showed the world’s biggest economy adding fewer-than-expected jobs during October.

One of the major currencies also surged to a six-week high against the US dollar during Friday’s session.

Why it matters: The US economy added 150,000 jobs in October, around half that recorded in September of 297,000. The figure also came lower than market expectations of 180,000 job adds.

Average hourly earnings rose by 7 cents, or 0.2% month-over-month, to $34.00 in October compared to 0.3% growth a month ago and below market views of 0.3%. The unemployment rate rose to 3.9% in October, higher than market expectations and the earlier month’s level of 3.8%.

The recent jobs report signalled a higher-than-projected slowdown in the country’s job market, which increased prospects of the US central bank refraining from announcing further rate hikes.

Although the US Federal Reserve had held its federal funds rate within the range of 5.25% to 5.5% at its meeting last week, Chief Jerome Powell had delivered mixed signals regarding further interest rate hikes.

Other economic data released on Friday showed the ISM services PMI declining to 51.8 in October, reaching the weakest reading in five months. The S&P Global US composite PMI slipped to 50.7 in October, compared to a flash reading of 51.0.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 1% to 105.07. This marked the biggest single-day decline in the currency since July. For the week, the US dollar index lost around 1.4%.

Weakness in the US dollar tracks lower Treasury yields. The benchmark US 10-year yield declined to a five-week low during Friday’s session.

The EUR/USD forex pair gained more than 1% to reach 1.0734, recording a weekly gain of around 1.6% and topping the 1.07 level for the first time since mid-September.

The US dollar fell around 0.7% to 149.39 against the yen, after the Japanese currency dipped to a one-year low versus the greenback earlier during the week. The Bank of Japan tweaked its bond yield control policy again, but not by as much as investors had been expecting.

The GBP/USD pair gained around 1.5% to reach 1.2381, hitting a six-week high. The forex pair notched a weekly gain of around 2%.

What to watch: With no major economic reports scheduled for today, investors await the release of data on balance of trade and comments from Fed speakers later in the week.

The markets today

UK stocks will be in focus today ahead of a couple of major economic reports

Context: Although London’s FTSE 100 declined on Friday amid lower oil prices, the index recorded gains for the week.

Details: The oil and gas sector plummeted by around 3.4% on Friday amid a sharp decline in oil prices following the easing of supply concerns. The decline in heavyweight energy stocks exerted pressure on the commodity-heavy FTSE 100 index during Friday’s session.

Shares of energy heavyweights BP and Shell moved lower as oil prices recorded losses for the second straight week.

Stocks of precious metal miners climbed around 4% on Friday, with an increase in gold prices following weakness in the US dollar. Both real estate and homebuilders stocks also added more than 2% on Friday.

The Bank of England had kept its interest rates unchanged at a 15-year high of 5.25% at its meeting on Thursday, which lend some support to investor risk sentiment.

The FTSE 100 fell 0.39% to close at 7,417.73 on Friday, but ended a two-week losing streak as the commodity-heavy index recorded a gain of 1.7% last week. The FTSE 250 index jumped 1.22% to settle at 17,983.84 on Friday, notching its strongest weekly performance in almost a year.

What to watch: Investors await the release of economic data on construction PMI and new passenger car registrations from the UK today. The S&P Global/CIPS UK construction PMI, which fell to 45 in September, is expected to increase to 46 in October. Analysts expect new passenger car registrations to decline to 15% year-over-year in October, from 21% in September.

Other Markets: US trading indices closed higher on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.66%, 0.94% and 1.21%, respectively.

The news shaping the markets

President Volodymyr Zelenskyy said the geopolitical unrest in Israel was taking the focus off the conflict in Ukraine. The news sent the RUB/USD forex pair slightly higher this morning.


Japan’s au Jibun Bank services PMI was revised higher to 51.6 in October, versus a preliminary reading of 51.1. Despite this, the figure remained below the 53.8 recorded in September, exerting pressure on the JPY/USD forex pair.


Qatar Financial Center PMI fell to 50.8 in October, versus 53.7 a month ago. This being the weakest reading since January sent the QAR/USD pair lower in forex trading this morning.


Saudi Arabia’s Riyad Bank PMI improved to 58.4 in October, from 57.2 in the previous month. This being the strongest reading since June lent support to the SAR/USD forex pair.


Colombia’s producer prices fell by 3.43% year-over-year in October. This was the sixth consecutive month of easing producer prices and sent the COP/USD pair higher in forex trading this morning.

What else to watch today

Germany’s factory orders, services PMI and composite PMI, Spain’s services PMI, composite PMI and consumer confidence indicator, Italy’s services PMI and composite PMI, France’s services PMI and composite PMI, Eurozone’s services PMI and composite PMI, Brazil’s current account, foreign direct investment, services PMI, composite PMI and BCB focus market readout, Mexico’s consumer confidence indicator, Canada’s Ivey Purchasing Managers Index, as well as Turkey’s balance of trade.


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