US Dollar Exchange Rates Today: USD Gets a Non-Farm Payroll Boost
- Written by: Gary Howes
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The US dollar exchange rate complex is higher as we head into the weekend after the release of US Non-Farm Payroll data proved to be just the ticket for long-suffering USD bulls.
A look at the US dollar exchange rate complex shows:
- The pound sterling to US dollar exchange rate is 0.11 pct lower having reached a level of 1.6874.
- The euro to US dollar exchange rate is 0.06 pct lower at 1.3862.
- The US dollar to Canadian dollar exchange rate is 0.02 pct higher at 1.0960.
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US data improves
The big event risk of the day, and indeed the month, has proven to be a pro-USD event. Chris Towner at HiFX says:
"The US economy served up a whopper in terms of the employment report for April. It was announced that 288k jobs were created and the unemployment rate had dipped to 6.3% - its lowest level since September 2008.
"This is clear evidence that the US economy, after the big freeze at the beginning of the year, has now gone through the thawing progress and accelerated into spring by blooming at a faster pace than the market had been anticipating. This is expected to help the US dollar and if we see a further continuation of job growth may turn the attention of the committee towards speeding up their tapering programme."
US Non-Farms due, a big number is needed
"Investors don't expect much from April non-farm payrolls. Job growth will accelerate and the unemployment rate should decline but unless NFPs print above 300k or the unemployment rate drops below 6.5%, the Federal Reserve won't second-guess their current pace of tapering," says Kathy Lien at BK Asset Management.
The Federal Reserve’s (Fed) signalled mid-week that it would move patiently to raise rates which has further emboldened dollar bears.
"The dollar’s steady drift lower can increase costs for U.S. businesses that buy their goods from overseas, but some relief could be around the corner with America’s jobs report on Friday expected to show a healthy pickup in hiring. If realized, faster U.S. job growth would open the door a little wider to a Fed rate hike next year and bolster the dollar’s allure," says Joe Manimbo at Western Union.
Friday payrolls are seen rising 210,000 for April, expected to be enough to lower unemployment a notch to 6.6 percent.
US GDP data sees Dollar exchange rate complex struggle?
In mid-week trade we saw the dollar rate is under-performing in global FX; this after US Q1 GDP came in well below expectations.
"Output across the world’s largest economy by transactions printed a mere 0.1 percent expansion against forecasts of 1.2 percent. ADP by contrast beat consensus, showing 220k jobs added against a forecast of 203k. The market has so not reacted particularly badly, pointing to the main event later tonight: the Fed minutes," says David White at Spreadex.
The equity market is hardly in freefall as a result of the number, investors might take solace from the crowd that the consequences of the event aren’t yet biting.
"But the session is far from over yet, and traders will likely be more vigilant of taking on risk today than most others, waiting to see how flows direct prices," says White.
Pound sterling vs US dollar: A clear breakout needed
Concerning the technical outlook for the Cable pairing, Craig Erlam at Alpari UK says he is awaiting further confirmation before calling an extension to the GBP/USD rally:
"Cable is yet to see a significant break out from its trading range, although I don’t think it’s too far away. The pair did close above the 1.6840 resistance on the 4-hour chart earlier this week and looked like it was going to push on, but it failed to gain any momentum and before long was back inside the range.
"This bull trap appears to have simply delayed a move that looks more and more likely to play out. The pair has been making higher lows for the last week or so and is fast approaching that 1.6840 resistance. A close above here would be bullish but following the false breakout on Monday, I’d like to see a clearer close above, with Monday’s highs being broken in the process. Should we see this then the next target will be 1.69, 161.8% fib expansion."
