Nonfarm Payroll release today

Daily Currency Update

The US dollar gained strength against the pound yesterday as the Core Personal Consumption Expenditures Price Index rose 4.2% on a yearly basis in July, compared to 4.1% in June. Additionally, the weekly Initial Jobless Claims declined to 228,000 and came in better than the market expectation of 235,000. Following these data releases, the US dollar index extended its daily recovery and gained nearly 0.5% on Thursday.

The August jobs report, which will include Nonfarm Payroll and wage inflation figures, and the ISM's Manufacturing PMI survey will be amongst the US economic data released today. For the last two months, the US dollar has weakened after the Nonfarm Payroll release, and it could be the same again today. Nonfarm Payroll is expected to drop again, and unemployment is expected to see no change.

The euro also came under pressures against the US dollar on Thursday and erased a large portion of the gains it recorded in the first half of the week. Investors may have felt that a 25 basis points interest rate hike from the European Central Bank in September is less likely following yesterday’s Eurozone Inflation readings, causing the euro to weaken. Eurozone inflation remained unchanged at 5.3% year on year in August but excluded volatile items. Core HICP (Harmonised Index of Consumer Price) was 5.3%, below July’s 5.5%. Early Friday EURUSD remains steady and below the market rate of 1.0850.