Right now, the US dollar is weak on all trading sessions. It’s low compared to the competition because traders aren’t taking new entry positions as they wait for the upcoming non-farm payrolls (NFP) report. There are indications that the report will be released before this week ends. As of this writing, the DXY (the US dollar index) hovers around the 93.20 range.
Forex Market Is Still Subdued
Investors aren’t making many moves in the forex market as they await the NFP report and its effect on the US labor market. The report’s release even takes greater significance after the American authorities stated that improvement in the employment rate would be the basis of tapering its stimulus policy.
After the latest federal open market committee (FOMC) meeting didn’t hint at tightening its current monetary policies, the US dollar declined by almost 1.5% compared to its main competitors despite reaching a multi-week high recently.
The palpable silence from the Fed chief, Jerome Powell, is a sign that the US central bank isn’t planning to shut down its stimulus policies in the nearest future.
New Zealand (NZD) Trading Is Bullish
New Zealand employment report exceeded all expectations. Hence, fundamental indicators are bullish about the NZD. The country’s Q2 2021 unemployment rate declined to a low last seen in Q4 2019 (about 3.7%). Thus, traders expect that the reserve bank of New Zealand (RBNZ) would declare a rate hike.
If that comes true, New Zealand will become one of the top economic central banks to tighten its monetary policy since the start of the covid-19 pandemic more than a year ago. Today, the focus is on the private ADP employment data, which would reveal the current outlook of the labor market in the united states. Economists surveyed by Reuters reveal that the ADP employment report might show that the private sector hires for last month was almost 700K, and the NFP data could show an increase of 890K jobs.
Stock Market Futures Are Almost Flat
Apart from the tech-heavy NASDAQ, all other stock market futures remained stagnant. Hence, investors are keenly watching out for Markit services July purchasing managers index (PMI) and the institute of supply managers (ism) services reports.
Also, they will be interested in the monetary policy talks by the federal reserve vice-chair Richard Clarida. A CMC market analyst, Michael Hewson, opined that “Clarida’s comments will determine his stance about the tapering of the stimulus policies.”
UBS global wealth management’s chief economist, Paul Donovan, further said that the financial markets would pay more attention if Clarida comments on regulatory policies or bond buying. General Motors (GMI) stock declined 3.7% despite declaring a profit of $1.96 per share, which exceeded the predicted $1.84 per share. Even the $34.6 million sales exceeded the projected $30 million.
Lyft (LYFT) stock gained 1.1% following a 5 cents per share loss which was better than the predicted 24 cents per share loss. Also, projected expectations of $698 million fell short of the declared $767 million on sales.