Forex Today: US Dollar pulls back after NFP-driven gains

Monday, 9 November: the key market developments to watch

November’s Sentix Investor Confidence figures feature on Europe’s economic calendar, while the US Dollar (USD) softens early on Monday after its advance at the end of last week. Speeches from several Federal Reserve (Fed) policymakers are due later in the day. Tuesday’s release of October US Consumer Price Index figures could bring increased market volatility.

October Nonfarm Payrolls (NFP) increased by 165K, according to Friday’s report from the US Bureau of Labor Statistics, comfortably exceeding the market forecast of 65K. September’s gain was revised from 29K to 60K. The same period saw the unemployment rate fall from 4.2% to 4.1% and the labour force participation rate rise from 61.8% to 61.9%. These strong labour market figures immediately lifted the USD Index, which picked up upward momentum and finished the day about 0.7% higher. During Monday’s European morning, the USD Index is easing back, although it remains just above 102.00.

A firmer appetite for risk at the start of the week appears to be hindering further USD outperformance against its peers. According to CNN, US President Donald Trump described further attacks on Iran as “highly unlikely” provided negotiations to end the conflict kept making progress. A meeting between Trump and Qatar’s Prime Minister is expected later in the day, with a new ceasefire and the resumption of nuclear talks on the agenda. Separately, Saudi Arabia reported that debris falling after an attempted attack had damaged a Saudi Aramco administrative building in Riyadh. The Saudi-led coalition also claimed it had intercepted two ballistic missiles and two cruise missiles aimed at the kingdom. Early Monday trading sees oil prices ease, with West Texas Intermediate down about 1% per barrel on the day.

US stock index futures are higher as market sentiment improves. At the time of writing, Dow Futures lead the advance with a daily gain of 0.7%.

EUR/USD lost almost 0.7% on Friday, wiping out its gains for the week. The pair is holding on to a modest rebound above 1.1150 early on Monday.

Gold ended the week nearly 5% higher despite Friday’s decline. As the new week begins, the precious metal is finding support and trading above $4,100, a daily rise of about 1%.

Gold holds firm as safe-haven appeal shows signs of returning

Recent trading in Gold has stood out, according to OCBC analysts, who describe “Gold’s relative resilience despite the sharp equity selloff” as “encouraging.” After the recent pullback and a decline in speculative positioning, they suggest that “Gold may be gradually regaining some of its safe-haven appeal, potentially providing shelter amid turbulence elsewhere in financial markets.” OCBC nevertheless warns that “the extent to which Gold can hold up if equity weakness persists will be an important test,” indicating that the staying power of this renewed safe-haven demand will depend on the performance of risk assets over the coming days.

GBP/USD is extending its recovery towards 1.3400 early on Monday, following two successive daily declines. Bank of England Governor Andrew Bailey is due to speak later in the day at the Swiss Institute of International Studies Lecture Series and Dinner, held at the University of Zurich in Switzerland.

USD/JPY ended last week higher after advancing about 0.5% on Friday. During the European morning, however, the pair is losing ground and retreating towards 158.00.