Forex market majors consolidate on turbulent trading day

  • The pound and the euro remain stable
  • US NFP numbers are stronger than expected
  • Wall Street gives up earlier gains

There was more of an upbeat mood in the forex market ahead of Friday’s trading. This was due to the previous trading day’s gains and a slight weakness in the dollar. This weakness helped the Pound and Euro hold their earlier higher positions and appears to be tied to a cautious stance as US NFP employment numbers come in above expectations. On Wall Street, Thursday brought gains on all major indexes, although those were largely reversed on Friday.

NFP data causes friction

The selling of the US dollar continued early Friday as traders cautiously awaited employment numbers from the Department of Labor. Early indications showed that job growth in the United States could show slower numbers. This weighed on the currency on Thursday. Treasury yields had also started to slow. This slowdown in the numbers helped ease some of the inflationary pressures and market tensions early in the day.

Analysts expected the number of stocks in the NFP report to slow to 325,000. That would have been significantly lower than the previous month’s number of 428,000. In fact, the numbers reported were higher than expected at 390,000. Still lower than the prior month, but the numbers pulled some back towards the USD.

Major currencies holding up against the dollar

With the USD selling off slightly among forex brokers, the USD index, a measure of the dollar’s strength against a number of other major currencies, fell as much as it had in two weeks. That said, it remains in a strong position but has given the other major currencies some respite. Both the pound and the euro have performed steadily.

EUR/USD traded above 1.075 early Friday, which was slightly higher in the early hours of the morning although it fell on the release of the jobs data. Speeches by ECB policymakers followed the general narrative from the start of the euro that the Central Bank needs to be more proactive in tackling inflation. The pound also traded around 1.26 before falling back as the country takes part in Queen Elizabeth celebrations this weekend.

Hectic stock market trading continues

Thursday was a positive day on Wall Street. All three major indices broke a two-day negative streak with solid gains to go higher on Friday. This moved markets into positive territory for the week as a whole as markets look to build on a previous similar positive week.

Trading was choppy throughout the week and this was demonstrated in Friday’s trading as all major indices gave up gains from the previous day. The Dow fell more than 1% while the S&P followed with a decline of 1.6%. The biggest loser on the day, however, was the Nasdaq which fell 2.5% to erase any positive momentum from the week.

Garland K. Long