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- GBP/USD caught a bid on Monday, rising 0.7%.
- PMI figures came in softer on both sides of the Atlantic.
- Easing Greenback flows gave Cable a chance to catch its breath.
- GBP/USD extended into its second day of gains in a row, kicking off the new trading week gaining seven-tenths of one percent and dragging bids back above the 1.2500 handle after last week’s bearish plunge below 1.2400. Purchasing Managers Index (PMI) figures missed the mark on both the UK and US sides. However, a general milieu of rising risk appetite kept safe-haven flows into the Greenback at bay.
UK PMI figures for December entirely missed the mark, printing below Wall Street forecasts and falling back but remaining above the 50.0 watermark for contraction expectations. The Composite PMI in particular fell to a 13-month low, easing to 50.4 from the expected hold at 50.5.
Final US S&P Global PMI figures somewhat missed the mark on Monday, with the Composite and Services PMIs for December both climbing from one month to the next, albeit less than analysts expected. Both indicators saw a slight downward revision from their preliminary prints, but still gained ground as the US economy churns on.
The key print for the midweek window will be Tuesday’s US ISM Services PMI for December. Median market forecasts are expecting an upswing to 53.0 from the previous month’s 52.1. Friday’s Nonfarm Payrolls (NFP) print will cast a long shadow over markets this week as investors anticipate a goldilocks print that will help push the Federal Reserve (Fed) toward more rate cuts, but not too weak or strong toward either side.
GBP/USD price forecast
GBP/USD has eased into a two-day rally, a welcome technical turn after the pair plunged to fresh nine-month lows last week below the 1.2400 handle. While selling pressure still has eyes set on the major 1.2000 price level, an exhaustion play could be on the cards as buyers try to muscle price action back up to the 50-day Exponential Moving Average (EMA) falling through the 1.2700 handle.
GBP/USD daily chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Canadian Prime Minister Justin Trudeau is more likely to announce his resignation, but he has yet to make a final decision, a source familiar with Trudeau's thinking said on Sunday.
Reuters reported that they did not know definitely when Trudeau would announce his plans to step down but said it expected it would happen before an emergency meeting of Liberal legislators on Wednesday.
Market reaction
The USD/CAD pair is trading 0.01% higher on the day at 1.4335, as of writing.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- NZD/USD trades with mild gains around 0.5640 in Tuesday’s early Asian session.
- The USD softens in choppy trade on Trump tariff confusion.
- The upbeat economic data and supportive measures from China could support the Kiwi in the near term.
The NZD/USD pair trades on a stronger note around 0.5640 during the early Asian session on Tuesday. The weakening of the US Dollar (USD) on confusion about President-elect Donald Trump’s tariff plans provides some support to the pair. The US ISM Services Purchasing Managers Index (PMI) for December is due later on Tuesday.
The Washington Post reported on Monday that Trump is considering a tariff plan that will narrow the focus to a select set of goods and services. However, Trump denied the report. "The market consensus is that Trump's bark will be worse than his bite, and any news that confirms that concept is fuel for rallying in risk assets and for a decline in the dollar and Treasury yields, but the reality here is that the downside risks remain and there's no clear endpoint for that," said Karl Schamotta, chief market strategist at Corpay in Toronto.
Nonetheless, the hawkish remarks from the US Federal Reserve (Fed) might lift the Greenback and act as a headwind for the pair. On Monday, Fed Governor Lisa Cook said that Fed policymakers could be more cautious with further rate cuts, citing labor market resilience and stickier inflation.
The encouraging Chinese economic data could boost the China-proxy Kiwi. China’s services activity expanded at the fastest pace in seven months in December, Caixin PMI showed on Monday. Additionally, the supportive measures from China might contribute to the NZD’s upside as China is a major trading partner for New Zealand.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- FOMC Minutes due in the midweek as markets weigh Fed rate cut chances.
- BoJ set to begin raising rates, but investors remain unclear about when.
- US NFP jobs data dump looms ahead later in the week.
USD/JPY churned near familiar levels on Monday, easing into the new trading week mostly flat. The pair is cycling near recent highs as investors await moves from either the Federal Reserve (Fed) or Bank of Japan (BoJ). Both central banks are expected to make more moves on interest rates in 2025, with the Fed aimed downward and the BoJ expected to to begin raising rates.
BoJ Governor Kazuo Ueda recently reaffirmed the BoJ’s commitment to reaching a neutral rate. What makes the BoJ unique among the rest of the major developed central banks around the planet is the BoJ’s long-running battle to get inflated started rather than trying to stop it. With BoJ reference rates far below the global median, the Japanese Yen took a hard turn in 2024 as rate differentials widened. With the natural rate of interest likely riding much higher than the current BoJ reference rates, BoJ Governor Ueda and company will have to begin adjusting policy rates up at some point or risk sending the Japanese economy back into a tailspin.
The Fed’s latest Meeting Minutes will be dropping on traders on Wednesday, but the key data print this week will be Friday’s upcoming US Nonfarm Payrolls (NFP) report. With one-half of the Fed’s mandate including full employment, markets will be watching this week’s labor figures from the US with renewed interest.
USD/JPY price forecast
USD/JPY continues to churn chart paper near recent highs, however the pair is still down slightly from decades-long peaks set during 2024 when the Yen plummeted across the board. Unless the BoJ caves on its hyperdovish stance and begins to raise interest rates, there isn’t a policy speech or technical scenario that can be presented that will rock the Yen out of its bearish stance. Global markets continue to favor the Greenback, keeping the Dollar-Yen pairing bid into the high side.
USD/JPY daily chart
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- Silver prices climb over 1%, hitting the crucial 200-day SMA at $29.87.
- Technical forecast suggests resistance at $30.00 and the dual SMA levels of $30.73/77, setting the stage for potential gains to $31.00.
- Support levels loom at December's low of $28.74, with further downside risk at the early September low of $27.69.
Silver's price rose over 1% on Monday and faces key resistance at the 200-day Simple Moving Average (SMA) at $29.87. At the time of writing, XAG/USD trades at $29.87 after bouncing off a daily low of $29.41 and reaching a high of $30.34.
XAG/USD Price Forecast: Technical outlook
Silver is facing strong resistance at $29.87, the 200-day SMA, which is crucial for buyers if they want to push spot prices higher. The uptrend remains intact, yet bulls need to clear the latter, followed by the $30.00 mark.
Up next is the confluence of the 50 and 100-day SMAs at $30.73/77, followed by $31.00 a troy ounce.
Conversely, if XAG/USD falls short of clearing the 200-day SMA, sellers could challenge the December monthly low of $28.74, followed by the September 6 low of $27.69.
XAG/USD Price Chart – Daily
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- EUR/USD ascends over 0.78%, buoyed by potential US tariff implications and a weak Dollar environment.
- Technical analysis points to a buyer's market as EUR/USD crosses 1.0400, with eyes set on further resistance levels.
- Near-term support and resistance levels defined at 1.0222 and 1.0500, with a critical watch on the 50-day SMA at 1.0558.
The EUR/USD increased over 0.78%, boosted by an article in The Washington Post mentioning three US President-elect Trump aides and saying that tariffs will be applied, focusing on specific sectors. The pair trades at 1.0388, above its opening price.
EUR/USD Price Forecast: Technical outlook
The EUR/USD finished 2024 at around 1.0260, but since then, buyers have stepped in, pushing the exchange rate above 1.0300, hitting a four-day peak of 1.0436 after The Washington Post headline.
Momentum seems to favor buyers, though the Relative Strength Index (RSI), despite edging upwards, remains bearish.
If buyers want to push the EUR/USD higher, they need to decisively clear 1.0400, followed by 1.0500. If surpassed, the next resistance would be the 50-day Simple Moving Average (SMA) at 1.0558, followed by 1.0600.
On the other hand, if bears stepped in, keeping the major below 1.0400, this could exacerbate a pullback toward last year’s low of 1.0222. On further weakness, parity emerges as the next support level.
EUR/USD Price Chart – Daily
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.79% | -0.76% | 0.24% | -0.79% | -0.39% | -0.40% | -0.58% | |
| EUR | 0.79% | 0.03% | 1.00% | 0.06% | 0.45% | 0.43% | 0.24% | |
| GBP | 0.76% | -0.03% | 0.99% | 0.03% | 0.42% | 0.40% | 0.21% | |
| JPY | -0.24% | -1.00% | -0.99% | -1.02% | -0.59% | -0.58% | -0.58% | |
| CAD | 0.79% | -0.06% | -0.03% | 1.02% | 0.33% | 0.34% | 0.18% | |
| AUD | 0.39% | -0.45% | -0.42% | 0.59% | -0.33% | -0.01% | -0.20% | |
| NZD | 0.40% | -0.43% | -0.40% | 0.58% | -0.34% | 0.01% | -0.19% | |
| CHF | 0.58% | -0.24% | -0.21% | 0.58% | -0.18% | 0.20% | 0.19% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
- Gold price holds steady, unfazed by the US Dollar's drop and higher Treasury yields.
- US Dollar Index dips to a five-day low, amidst speculation of fiscal policy changes driving inflation fears.
- Fed's cautious stance on rate cuts highlighted by Governor Cook in light of ongoing economic slowdown and persistent inflation.
Gold prices remained flat at the beginning of the week even though the Greenback is getting battered. Higher United States (US) Treasury bond yields kept the non-yielding metal pressured while US President-elect Donald Trump grabbed the headlines amid confusion on his tariff plans. The XAU/USD trades at $2,638, virtually unchanged.
Yellow Metal failed to capitalize on the sudden weakness of the US Dollar. Speculation that the upcoming Trump administration agenda could reignite inflation spurred a jump in US Treasury yields amid fears that a Republican-controlled Congress could increase the Government’s budget deficit.
The US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, fell to a five-day low of 107.75 and is down 0.60% at 108.27 at the time of writing.
US data revealed during the day reaffirmed that the economy continues to slow down amid a “timid” reacceleration of inflation. S&P Global reported that business activity in the services segment dipped, while the US Census Bureau announced that Factory Orders plunged in November after hitting a record high in the previous month.
In the central bank space, Federal Reserve (Fed) Governor Lisa Cook said they could adopt a gradual approach to reducing interest rates. She explained that due to the resilience of the labor market and persistent inflation, policymakers can be more cautious.
This week, the US economic docket will feature the ISM Services PMI, the Federal Open Market Committee (FOMC) meeting minutes, Initial Jobless Claims and December’s US Nonfarm Payrolls report.
Daily digest market movers: Gold price steadies at around $2,630
- Gold remains pressured as US real yields rise four basis points (bps) up to 2.26%.
- The US 10-year T-note yield edges up two and a half bps to 4.628%.
- US S&P Global Services PMI in December slowed from 58.5 to 56.8, exceeding estimates of 56.1.
- US Factory Orders in November dropped by 0.4% MoM from October’s upwardly revised figures of 0.5%. Economists expected a contraction of -0.3%.
- At the time of writing, the CME Fed Watch Tool shows that investors have pushed back the odds of the Fed's first rate cut until the May 7 meeting.
- Goldman Sachs modified its forecast to gold prices and doesn’t expect the yellow metal to reach $3,000 an ounce by the end of 2025, based on the expectation that the Fed will make fewer rate cuts.
XAU/USD technical outlook: Gold price set to challenge $2,650
Gold price ended 2024 trapped within the $2,600 - $2,620 range amid a robust US Dollar on fears of Trump’s agenda. Nevertheless, the non-yielding metal has broken the top of that range, which opened the door to XAU/USD to exchange hands at around the $2,630 - $2,650 level, with the 50-day Simple Moving Average (SMA) meandering around $2,652.
If bulls clear the 50-day SMA, the next key resistance level would be $2,700 ahead of challenging the December 12 peak at $2,726. If surpassed, the next stop would be the record high at $2,790.
Conversely, if sellers drag the XAU/USD below the 100-day SMA, look for a test of $2,500 before Gold extends its losses to the 200-day SMA at $2,494.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
The US Dollar eased on Monday, giving other currencies a chance to recover some much-needed ground as markets gear up for another US NFP jobs print due at the end of the week.
Here’s what you need to know heading into Tuesday, January 7:
The US Dollar Index (DXY) eased lower, falling back below the 109.00 handle and shedding around two-thirds of one percent. Broad-market risk sentiment is back on the rise, pushing the safe haven USD lower across the board. US Nonfarm Payrolls (NFP) due on Friday will be the week’s key reading, however US ISM Services Purchasing Managers Index(PMI) figures are due on Tuesday.
EUR/USD bidders found the buy button on Monday, bolstering Fiber back into the 1.4000- handle. Preliminary European Harmonized Index of Consumer Prices (HICP) inflation is due early in the European market session on Tuesday, and markets will be looking for a slight uptick in headline inflation figures. However, even a bump in near-term inflation numbers are unlikely to spark much fear or greed in traders, as underlying inflation pressures appear to continue to cool.
GBP/USD caught a similar ride at the outside of the new trading week, gaining seven-tenths of one percent and getting muscled back above the 1.2500 handle. UK economic data remains decidedly limited this week, and Cable will be getting pushed around by overall market sentiment in the Greenback more than anything else.
AUD/USD tried to spark a bullish recovery on Monday, but bidding efforts fizzled, dragging Aussie bids back below the 0.6300 handle after briefly tapping the major technical level. Australian Purchasing Managers Index (PMI) figures improved slightly over the weekend, but it still wasn’t enough to firmly push the AUD off of its recent lows.
Economic Indicator
Harmonized Index of Consumer Prices (YoY)
The Harmonized Index of Consumer Prices (HICP) measures changes in the prices of a representative basket of goods and services in the European Monetary Union. The HICP, released by Eurostat on a monthly basis, is harmonized because the same methodology is used across all member states and their contribution is weighted. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.
Read more.Last release: Wed Dec 18, 2024 10:00
Frequency: Monthly
Actual: 2.2%
Consensus: 2.3%
Previous: 2.3%
Source: Eurostat
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.
Federal Reserve (Fed) Board Member and Vice Chair for Supervision will be stepping down from his regulatory role. The announcement came from a Federal Reserve press release and is expected to take place at the end of February.