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.
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