NFP Preview: Dollar in focus
As the USD index trades near a five-month high, Angeline Ong looks at if the NFP March print will cause investors to further cut their bets on a June Fed rate cut or be weak enough to prompt traders to stick to June rate cut hopes
(AI Video Summary)
The impact of the NFP report due this Friday
The upcoming non-farm payroll (NFP) report this Friday is going to have a big influence on the market. If the data shows a higher number than expected, it could change people's expectations about the Federal Reserve raising interest rates. On the flip side, if the data is weaker than expected, it might make the US dollar even stronger. In March, the target number for non-farm payroll is 200,000, which is lower than the previous month's figure of 275,000. If the actual number for March is much higher, it could mean that people are less worried about interest rate hikes.
Dollar basket chart
Ong then points to a fancy chart called the dollar basket chart, which has a red line showing the US dollar getting stronger. But there's also a green line on the chart that shows the opposite happening – the dollar falling instead of rising. This happened in January 2024, but then it went back up. The red line shows that same pattern happening again. Ong makes it clear that investors are now focused on the upcoming data and how it will affect the market. Whether the US dollar gets stronger or weaker will depend a lot on what the NFP report shows on Friday. If the number is better than expected, there's a chance for the US dollar to do well.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
- Forex
- Shares
- Indices
