US Dollar Bullish Ahead of October's NFP Data

US Dollar Bullish Ahead of October’s NFP Data

Posted Friday, November 5, 2021 by
Aiswarya Gopan • 1 min read

The US dollar looks all set to end the second consecutive week in the green against its leading rivals even as investors cautiously look forward to the release of the non-farm payrolls data for October later in the day. At the time of writing, the US dollar index DXY is trading around 94.29.

In the previous session, the dollar index strengthened by more than 0.5% despite dovish statements from the Fed chair at the latest FOMC earlier this week. Despite Powell stating that he was not considering a rate hike anytime soon, analysts remain optimistic about the potential for more bullishness in the greenback against other currencies, given the rapid pace of economic recovery underway in the US.

The NFP report scheduled to come out today is likely to bolster investor confidence in the US economy and currency. According to economists’ forecast, the US could have experienced an addition of 450k jobs through the previous month, a far higher reading than September when the figure was 194k.

Additional strong moves in the US dollar were driven on the back of a dovish tone from ECB President Christine Lagarde, who played down the possibility of a rate hike late next year. Lagarde stating that it was unlikely that the ECB could hike interest rates in 2022 sent the common currency lower in the previous session, and supported the greenback.

So far this week, the dollar index has gained 0.21%, especially after the BOE shocked markets by holding interest rates steady. This caused GBP/USD to weaken by 1.34% for the week, further pushing investors back towards the US currency instead.

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