The US dollar experienced a surge in value on Friday due to better-than-expected monthly US jobs data. The March Non-Farm Payrolls figure exceeded expectations, coming in at 303k, far higher than the anticipated 212k figure. This marks the fifth consecutive month of outperformance. Additionally, the unemployment rate fell unexpectedly from 3.9% to 3.8%, which further supported the dollar.
GBP/USD hits eight month high after US jobs data
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Daily Currency Update
The strong labour data supports the argument that we may see fewer interest rate cuts from the US Federal Reserve this year than originally forecasted. While borrowing costs are still expected to decrease in June, which will be the first time in over 20 years, we may only see two or three rate cuts this year. This is due to the increasing evidence that the world’s largest economy can withstand economic challenges.
In the aftermath of the release of this data, GBP/USD fell from around 1.2650 to a low of 1.2570, while EUR/USD fell from around 1.0850 to 1.0790. However, much of the gains made by the dollar have since been reduced as stock markets open higher, which has decreased demand for the safe-haven USD.
The only significant data that emerged from the UK on Friday was a better-than-expected Construction PMI reading of 50.2, which is the first time it has exceeded the 50 level that divides expansion and contraction since September of last year. Currently, GBP/USD is at 1.2620, while GBP/EUR is around 1.1650.
Key Movers
This week's economic calendar is relatively quiet, with little top-tier data scheduled for today or tomorrow. However, we could see some increased market volatility on Wednesday when the latest US Consumer Price Index figure is released. The CPI in the US is predicted to increase from 3.2% to 3.4% on an annualized basis. Any significant deviation from this prediction could cause the dollar to either strengthen or weaken.Later on Wednesday, we'll have access to the minutes from March's Fed interest rate decision. The main event of the week will be Thursday's European Central Bank interest rate decision, with some market participants expecting ECB chief Christine Lagarde to prepare the markets for a rate cut in June. At the March meeting, Lagarde alluded to April as the point at which they would have sufficient data to signal a change in policy. Therefore, all eyes will be on her statement and the press conference, which is due 30 minutes after the decision. The likelihood is that there will be no changes this time.
Expected Ranges
- GBP/USD: 1.2580 - 1.2670 ▼
- GBP/EUR: 1.1625 - 1.1725 ▼
- EUR/USD: 1.0790 - 1.0880 ▼
- AUD/USD: 0.6560 - 0.6620 ▼