Dollar Holds Steady Ahead of US Jobs Report

USD

The dollar index which measures the greenback against a basket of major currencies held steady near a two-week high of 96.83 ahead of the US jobs report. Market participants will be looking carefully for the data to assess their effect on the Fed's monetary policy. A change in the monetary policy stance of the Federal Reserve remains data-dependent, especially that the latest economic indicators are still solid despite some weakness in the manufacturing sector. The ISM Manufacturing employment rose to 54.5 to beat an estimate of 52.8, the ISM Non-Manufacturing employment was at 55.0 versus 58.1 in May, and the ADP came in at 102 thousand, well below the consensus of 140 thousand. The last NFP figure missed estimate by 110 thousand jobs as it showed that the US economy created only 75 thousand jobs in May versus 185 thousand expected. As for June, economists expect the US economy to have created at least 160 thousand jobs, and the Unemployment rate is still holding a low of 3.6%. On the other hand, the Average Hourly Earnings will be monitored closely as it suggests hints about the pace of inflation. A surge in wages could give the Federal Reserve a reason to hold current rates. The probability of a 25 basis point rate cut in July is now at 71.3%, the US 10-year yields dropped to a low of 1.937%, the lowest since November 2016, the EURUSD dipped to $1.1271, and the GBPUSD is trading in a tight range between $1.2555-90.

Metals

Precious metals prices were almost unchanged as the US was on holiday. Market participants are looking forward to today's release of the US Jobs report. A strong report could boost the demand for the dollar as it would lower the chances of aggressive easing by the Federal Reserve. The price of a gold ounce is holding steady near $1415, the silver ounce drifted slightly lower to $15.20, while palladium is hovering near a thirteen-week high of $1570.

Oil

Oil prices finished lower on Thursday amid growing fears over the global economic outlook. The manufacturing indicators are still signaling a soft performance in the sector from all around the world. However, the latest agreement on an extension to the OPEC+ supply cut deal for additional nine-months offset losses. Yesterday, the Royal British Marine seized an Iranian oil tanker in Gibraltar which could signal a further escalation for the geopolitical tension is on the way. The West Texas Intermediate crude oil futures dropped to $56.59, and Brent futures edged lower to $63.09.

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