Forex Today: US Nonfarm Payrolls data to ramp up volatility
Here’s what to know on Tuesday, December 16:
The US dollar (USD) steadied early Tuesday after a modest decline against major peers on Monday. Market focus turns to the US employment report, with Nonfarm Payrolls (NFP) data for October and November due, along with November wage inflation and the Unemployment Rate. Traders will also monitor October Retail Sales and the preliminary December S&P Global PMI readings.
US Dollar Performance This Month
The table below shows how the USD has moved versus key currencies this month. Notably, the USD was weakest against the Canadian dollar.
USD EUR GBP JPY CAD AUD NZD CHF
USD -1.30% -0.93% -0.84% -1.48% -1.28% -0.80% -0.89%
EUR 1.30% 0.38% 0.45% -0.18% 0.02% 0.51% 0.42%
GBP 0.93% -0.38% 0.33% -0.56% -0.36% 0.12% 0.04%
JPY 0.84% -0.45% -0.33% -0.65% -0.47% 0.03% -0.06%
CAD 1.48% 0.18% 0.56% 0.65% 0.15% 0.70% 0.61%
AUD 1.28% -0.02% 0.36% 0.47% -0.15% 0.49% 0.40%
NZD 0.80% -0.51% -0.12% -0.03% -0.70% -0.49% -0.09%
CHF 0.89% -0.42% -0.04% 0.06% -0.61% -0.40% 0.09%
The heat map illustrates relative percentage changes between currencies, with the base currency listed on the left and the quote currency across the top. For instance, selecting USD as the base and moving to JPY shows the percentage change of USD/JPY.
The USD Index slipped about 0.15% on Monday as traders remained cautious, limiting downside in the latter part of the session. In European trading on Tuesday, the USD Index hovered above 98.00, while US stock index futures fell between 0.3% and 0.8%. The Unemployment Rate is expected to hold at 4.4% in November, with NFP forecast to rise by roughly 40,000.
EUR/USD is trading in a narrow range around 1.1750 after a modest gain on Monday. HCOB PMI data for Germany and the Eurozone will be released later in the session as part of the European calendar.
GBP/USD ended Monday little changed, with only a slight dip in early European trading on Tuesday. It remains above 1.3350. The UK Office for National Statistics (ONS) is releasing October employment data at 07:00 GMT.
Canada’s inflation data showed annual CPI rising 2.2% in November, cooling slightly below expectations of 2.4%. USD/CAD continues to trade in a sideways pattern below 1.3800 after Monday’s flat close.
USD/JPY declined about 0.4% on Monday amid growing expectations for a hawkish BoJ stance. The pair extended its drop in early Tuesday trading, touching around 154.83, down about 0.25% for the day.
Australia’s private-sector activity expanded in December but at a slower pace, with the S&P Global Composite PMI easing to 51.1 from 52.6. AUD/USD remains under modest bearish pressure, trading below 0.6650.
Gold trimmed its recent upside after testing $4,350 and closed flat on Monday. XAU/USD sits near $4,280 early Tuesday, down roughly 0.5%. Optimism over a possible Russia-Ukraine peace agreement appears to be diminishing bullion interest.
Nonfarm Payrolls (NFP) form part of the US Bureau of Labor Statistics monthly jobs report. The NFP figure measures monthly changes in employment across the economy, excluding farming.
NFPs influence Federal Reserve decisions by signaling progress toward full employment and the 2% inflation goal. A stronger-than-expected NFP typically supports a tighter monetary stance and a higher USD, while softer NFPs can prompt rate-cut expectations and dollar weakness.
In practice, NFPs often correlate positively with the dollar. When payrolls exceed forecasts, the USD tends to rally due to higher inflation expectations and rate-hike prospects; softer NFPs can lift gold and other non-dollar assets as investors shift toward cash and lower-rate scenarios.
It’s important to view NFP as one element of the broader jobs report. Sometimes a hotter NFP is offset by weaker average earnings, minutes of the report can soften the inflation signal, and participation rate or hours worked can sway the market in surprising ways during exceptional periods like the “Great Resignation” or major financial crises.
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