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  • Market Insights  >  Weekly Outlook

8 July 2022,03:32

Weekly Outlook

US Dollar Index Consolidates Ahead of US NFP Report

8 July 2022, 03:32

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On Thursday evening (GMT+3), the US Initial Jobless Claims data was released, showing that 235,000 people filed for unemployment insurance for the first time in the week of July second. This is the highest since January this year, and up from the forecasted 230,000 and the previous month’s 231,000.

Continuing claims, whose data is released for the week before, showed a 51,000 rise to 1.375 million, higher than the forecasted 1.337 million.

Despite what seems like a cooling labour market, Wednesday’s JOLTS Job Openings showed a higher-than-expected 11.254 million – above the forecasted 11 million and a slight dip from April’s 11.7 million. This means that 1.9 jobs for every unemployed person in May and is one of the reasons that the Fed cites why the US economy is robust enough to withstand aggressive rate hikes without slipping into recession.

Post Market

The US dollar has touched a 20-year high as investors flock to the safe-haven dollar as fears of a recession hit the G7 countries. The US Dollar Index, which rallied on Tuesday to soar above the $106 mark, has continued its rise,  to consolidate around the $107 range. The US Dollar Index, whose composition is weighted against a basket of foreign currencies, leans heavily – over 57% – on the Euro, which has continued on its tumble to hit 1.018.

Meanwhile, the 10-year Treasury yield has also risen past 3%.

While market movement into the US Dollar Index has been largely a result of risk-off sentiment amid fears of recession, the equity markets have been edging up as investors are beginning to bet that the Fed can stick to a soft landing. 

Gold, whose price saw a sheer drop to near $1732 at the dollar’s rally, has been hovering around the same level in an attempt to recover from yesterday’s slump.

Investors are now strongly advised to pay close attention to the upcoming NFP data, which will be released on Friday, 8 July at 15:30 (GMT+3). The current NFP forecast is 268,000, down from May’s value of 390,000.

As a friendly reminder, do keep an eye on market changes, control your positions, and manage your risk well.

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