Dollar Broadly Lower, U.S. Non-farm Payrolls and Revised Q2 GDP Data Awaited

U.S. shares closed higher on Friday, contributing to help main gauges snap a two-week losing streak. Investors’ confidence in risky assets was boosted by optimism that President Donald Trump will deliver on tax reform.

The Dow Jones Industrial Average added 0.14 percent to end at 21,813.67. The S&P 500 (SPX) gained 0.17 percent, to close at 2,443.05 while the Nasdaq Composite ticked or 0.09 percent lower to 6,265.64. For the week, the DJIA jumped 0.65 percent, the S&P 500 climbed 0.72 percent and the Nasdaq advanced by 0.79 percent. These weekly gains halted a two-week drop for the Dow and S&P 500 and a four-week streak of decline for the Nasdaq.

President Donald Trump’s chief economic adviser Gary Cohn on Friday said that the White House would turn its attention to the long-awaited tax reform agenda next week.

By contrast, the dollar slumped against a basket of global currencies on Friday due to falling expectations of a rate hike later this year. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, tumbled by 0.63% to close at 92.64.

Speaking at the annual central bankers’ meeting in Jackson Hole, Wyoming, Federal Reserve chair Janet Yellen avoided talking about monetary policy. Instead, she defended rules adopted in response to the financial crisis, reiterating that any rollback of post-crisis financial reforms should be “modest”. Yellen’s comments sparked uncertainty as to whether the central bank will raise rates one more time or unwind the central bank’s balance sheet later this year.

In the week ahead, the U.S. Labor Department will release its August nonfarm payrolls report at on Friday amid expectations that the data will show jobs growth of 180,000 in August, following an increase of 209,000 last month. The unemployment rate forecast to hold steady at 4.3% while average hourly earnings are expected to rise 0.2% after adding 0.3% a month earlier.

Before the employment report, The U.S. Commerce Department is to release revised figures on second-quarter economic growth on Wednesday. Analysts expect the data to show the economy grew at a 2.7% annual rate in the last quarter after having grown 1.4% in the preceding quarter.

U.S. data released next week also include reports on consumer confidence due on Tuesday, ADP private sector payrolls on Wednesday, personal income and spending on Thursday and ISM Manufacturing PMI on Friday.

Turning to the euro, the single currency was broadly higher versus its peers on Friday and especially rose to its highest in more than two years after comments of European Central Bank President Mario Draghi. The euro spiked 1 percent to a high of $1.1940, its highest against the U.S. dollar since January 2015 after Draghi’s initial remarks that the global recovery is improving.

However, the currency retreated a little bit after he claimed that significant monetary accommodation is still needed and that inflation is not yet converging to the central bank’s target.

Next week, the euro zone will publish flash inflation figures for August on Thursday. Economists forecast that the report will show consumer prices rose 1.4% in August following a rise of 1.3 percent last month.

Sterling closed the week higher versus a weak dollar, with GBP/USD rising 0.61% to 1.2878, reversing from Thursday’s two-month lows of 1.2773. On Friday, the UK will release a reading on August manufacturing sector activity amid expectations for a small dip to 55.0 from 55.1 a month earlier.

Elsewhere, the China Federation of Logistics and Purchasing is due to release data on August manufacturing sector activity on Thursday. Analysts expect a modest downtick to 51.3 from a reading of 51.4 in July. After that, on Friday, the Caixin manufacturing index, which focuses more on small and mid-sized firms, is scheduled to be released amid expectations calling for a small downtick of 0.1 points to 51.0.

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