US dollar in decline prior to US labor market data release

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At the end of the business week, which is the 35th one of 2021, during the European trading morning on Friday, 3 September 2021, the US dollar (USD) fell against its major rivals to its lowest level in almost a month. This happened prior to the release of the major employment report in the United States (US), which could encourage central bankers of the US, members of the Federal Open Market System (FOMC) to reduce stimuli from bond buyout, which is still US$ 120 billion per month.

Based on these facts, in anticipation of today’s data from the US labor market and under the influence of investor sentiment, the exchange rate of the USD fell. On 3 September 2021, at 6:30 am CET, according to the US Dollar Currency Index (DXY), which compares the exchange rate of the USD with the other six major world currencies, we have seen the USD at the price level of 92.22 with a daily slight decline of -0.01%. In the previous days of this week, the USD exchange rate was affected by both global geopolitical developments in the world and in the US, and its value slid lower, with the current DXY dollar index level approaching its monthly minimum with the lowest value from 5 August 2021.

This state of decline in the exchange value of the USD was quickly used by foreign exchange traders in relation with the single European currency, the euro (EUR). The exchange value of the EUR increased against the USD when it traded above US$ 1.18 per EUR. On 3 September at 6:43 am CET, the EUR/USD global currency pair traded on the forex exchange – Forex market at a mutual exchange rate of US$ 1.1878 per EUR with the current daily strengthening of the EUR by +0.04% against the USD. The US domestic currency strengthened for most of July and part of August 2021, with the fact that the narrowing of stimuli by the Fed could be immediate, in a situation where the US experienced a sharp increase in Covid-19 cases.

A week ago at the Fed’s Jackson Hole symposium, the Fed chief Jerome Powell said a gradual cut was still possible this year, but there was no hurry with the subsequent raise of interest rates, which lowered the dollar further, CNBC economic correspondents said. According to a survey by Reuters economists, Non Farm Payrolls are to be published during the beginning of the European trading afternoon on Friday, 3 September and they are expected to increase by 750,000, while the unemployment rate will decrease from 5.4% to 5.2%. However, estimates range widely, from just 375,000 to more than a million. The signals of the economy before the report were mixed, and overnight from Thursday to Friday, 3 September; the data showed that redundancies had fallen to their lowest level in more than 24 years. However, Wednesday’s ADP national employment report from 1 September was much weaker than economists expected.

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