Forex Today: Risk off and a mixed Dollar with all eyes on NFP

Here is what you need to know on Friday, March 10:

US stocks dropped sharply on Thursday and US Treasuries rose ahead of Friday’s Nonfarm Payrolls report. Initial Jobless Claims unexpectedly climbed to the highest level in ten weeks, taking some bets for a 50 basis points Fed rate hike off the table. 

US yields moved further to the downside during the American session. The US 2-year yield fell to 4.95% and the 10-year to 3.92%. The slide in yields weighed on the US Dollar. The DXY pulled back for the second day in a row, falling to 105.20. The retreat of the Greenback is still a correction from Tuesday’s rally, which was boosted by Federal Reserve Chair Powell's hawkish remarks. 

US February Nonfarm Payrolls Preview: Analyzing Gold price's reaction to NFP surprises

The US employment report will be released on Friday, with traders seemingly on the sidelines ahead of payrolls. The numbers could be critical for Fed rate expectations as the odds of a 50 basis points rate hike jumped during the current week. 

EUR/USD rose for the second day but was unable to retake 1.0600. Voices against the guidance of “significant rate hikes ahead” emerged at the European Central Bank (ECB), with Bank of Italy Governor Ignazio Vizco criticizing his colleagues. GBP/USD had the best day of the week so far, peaking at 1.1937, the highest in two days. EUR/GBP pulled back below 0.8900. 

The Bank of Japan will announce its monetary policy decision (no change expected) at Governor Kuroda’s last policy meeting. His term expires on April 8, after a ten-year tenure. Japan’s Lower House of Parliament approved Kazuo Ueda to become the next governor and two deputy governors (Ryozo Himino and Shinichi Uchida). The Upper House will vote on the nominees Friday. USD/JPY lost more than a hundred pips on Thursday, going all the way back to 136.00.

The US Dollar posted mixed results awaiting key data. Commodity and emerging market currencies were hit late on Thursday as Wall Street plunged. USD/MXN rebounded 2.5% from fresh multi-year lows. 

AUD/USD and NZD/USD turned negative hit by risk aversion, falling to 0.6580 and 0.6100, respectively. The weak Canadian Dollar extended losses; USD/CAD rose for the fourth consecutive day, reaching the highest level since mid-October, above 1.3830. 

Gold climbed above $1,830/oz, boosted by lower yields and unaffected by the risk-off tone. Silver failed to hold to gains and pulled back to $20.00. Bitcoin broke below $21,000 to the lowest since January 20. Crude oil prices fell by more than 1%.