Forex Today: Dollar returns ahead of the Nonfarm Payrolls report

What you need to take care of on Friday, October 7:

The American dollar recovered its positive momentum and closed Thursday with gains against most major rivals. The tepid tone of global equities and rising US Treasury yields underpinned the greenback while reflecting investors’ concerns.

The EUR/USD pair trades just below the 0.9800 figure, as worse-than-anticipated EU data added pressure on the EUR.  German Factory Orders declined by 2.4% MoM in August. The annual reading, however, was better than anticipated, still down by 4.1%. Meanwhile, EU Retail Sales contracted a modest 0.3% MoM in August but were sharply down compared to a year earlier, shedding 2%.

Also, the  European Central Bank published the Monetary Policy Meeting Accounts, which showed that some officials preferred a bigger rate hike of 50 bps. Additionally, the median three-year inflation expectations remained at 3%. Policymakers noted that the EUR depreciation could exacerbate inflationary pressures, adding that acting “decisively” now will prevent the need to hike at a more aggressive pace later.

Bank of Canada Governor Tiff Macklem hit the wires and said that while easing inflation is welcome news, it would not disappear on its own. Market players rushed to price in higher chances of the BOC hiking rates by 50 bps in October. The USD/CAD pair is up to 1.3740.

In the US several US Federal Reserve officials were on the wires, all of them aligned with the aggressive monetary tightening. Wall Street extended its slide after starting the day with modest losses. US Treasury yields, on the other hand, reached fresh weekly highs.

The Australian dollar was among the worst performers, trading against the dollar at around 0.6400 and not far from the 2022 low at 0.6362. GBP/USD also resumed its decline and is now hovering at around 1.1150.

The greenback appreciated against its safe-haven rivals. USD/CHF is hovering around 0.9910, while USD/JPY ticked higher and stands just above 145.00.  

Spot gold shed some ground but held above the critical $1,700 threshold. It currently changes hands at $1,713 a troy ounce. Crude oil prices kept advancing, with WTI now trading at $88.80 per barrel.

The focus on Friday will be on US employment data, as the country will publish the September Nonfarm Payrolls report.

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