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Dollar Pauses Decline Ahead of Non-Farm Payrolls

May 1, 2014 at 17:44 by Vladimir Vyun

Ulysses S. Grant on US 50-dollar billThe US dollar halted its decline that has occurred after yesterday’s monetary policy announcement of the Federal Reserve. Positive macroeconomic indicators helped the currency to resist the downward pressure, though the employment data was unexpectedly poor and made traders reluctant to buy the greenback ahead of tomorrow’s non-farm payrolls.

Today’s data from the United States showed that personal income and expenditures grew in March, while the manufacturing index rose, surprising those economists who have expected a small drop of the gauge. The news was welcomed by dollar bulls, who were depressed by yesterday’s reaction of the dollar to the Fed announcement. The US central bank performed yet another stimulus reduction, yet the greenback dropped sharply even though the event was considered positive for the currency.

Not all news was pleasant for those who want to be bullish on the dollar. Initial claims for unemployment benefits unexpectedly rose last week, making traders wonder if the optimistic forecasts for non-farm payrolls are right. Analysts predict that the payrolls report, which is released tomorrow, will show substantial growth of employment by 216,000.

EUR/USD traded near the opening level of 1.3865 as of 17:41 GMT today after rising to the daily high of 1.3888. USD/JPY ticked up from 102.22 to 102.25. At the same time, GBP/USD retained its upward bias, rising from 1.6873 to 1.6893.

If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.

2 Responses to “Dollar Pauses Decline Ahead of Non-Farm Payrolls”

  1. Mey Sorn

    Why does GBP go up so strongly this year? Why is USD so weak even though it tapered 2 times ?

  2. Andriy Moraru

    GBP is strong mainly due to higher inflation, which will demand a faster increase of the interest rate.

    The USD is weak probably because the expectations of USD interest rate hikes are still very timid.

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