Asian session review: USD little changed as markets await U.S. August jobs report

USD traded flat against most of its major counterparts in the Asian session on Friday ahead of the release of the U.S. employment situation report later today, which is expected to provide clues on the timing of the Federal Reserve’s pullback in bond buying.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, edged up 0.01% to 92.24.

Progress on employment is crucial for the U.S. central bank. The Fed's Chairman Jerome Powell suggested last week that he would like to assess incoming data on the labor market before committing to a taper timeline. That means the August NFP report could be more consequential than usual.

The latest labour market indicators were predominantly weaker. The ADP’s employment report, which is viewed as a preview for the official jobs report, disappointed markets as it showed that 374,000 jobs were added to private-sector payrolls in August, which was well below economists’ forecast of 613,000. Meanwhile, the Institute for Supply Management's (ISM) manufacturing employment sub-index for the U.S. fell to 49.0 in August from 52.9 in July, pointing to a contraction in job creation in the U.S. factory sector. The U.S. Bureau of Labor Statistics’ latest weekly jobless claims data showed that the four-week moving average of the U.S. jobless claims dropped to a pandemic low of 355,000 in the week ending August 28th. The Conference Board’s Consumer Confidence Survey revealed that consumers’ assessment of the labor market eased in August. 11.8% of respondents experienced difficulties in finding a job in the last reporting month (versus 11.1 percent a month earlier). At the same time, some 54.6 percent of respondents said jobs were plentiful (versus 55.2 percent a month earlier).

The U.S. economy is expected to add 750,000 jobs in August after 943,000 jobs added in July, while the unemployment rate is forecast to drop to 5.2% from 5.4% in the previous month.