US Dollar Struggles To Find Demand Ahead Of Key Non-Farm Report

Here’s what you need to know for Friday, June 7:

The U.S. dollar (USD) struggled to hold firm against its rivals on the final trading day of the week, with the dollar index holding near a multi-week low of 104.00 set earlier this week. The U.S. Bureau of Labor Statistics will release its May nonfarm payrolls report later in the day, which includes data on nonfarm payrolls, the unemployment rate, and wage inflation.

The U.S. unemployment rate is expected to remain steady at 3.9% in May, while nonfarm payrolls are expected to increase by 185,000 jobs after rising by 175,000 in April, a smaller-than-expected gain. Wage inflation, measured by the change in average hourly earnings, is expected to remain unchanged at 3.9% on an annual basis. The benchmark 10-year Treasury yield was flat around 4.3% ahead of the labor market data, and U.S. stock index futures were slightly higher on the day.

U.S. nonfarm payrolls growth is expected to stabilize in May as signs of a cooling labor market increase.

The European Central Bank (ECB) announced on Thursday that it would cut its key interest rate by 25 basis points after its June policy meeting. The decision was in line with market expectations. In a press conference after the meeting, ECB President Christine Lagarde did not confirm further easing in the near term, but reiterated the data dependence of future policy. The EUR/USD pair had a relatively muted reaction to the ECB meeting, but still managed to move higher to around 1.0900. During the European trading session, Eurostat will release revised figures for employment change and gross domestic product (GDP) for the first quarter. Meanwhile, Germany’s Federal Statistical Office reported earlier in the day that industrial production fell 0.1% on a monthly basis in April.

During the Asian session, data from China showed that exports grew 7.6% year-on-year in May, beating market expectations of 6%. During the same period, imports grew 1.8%. AUD/USD moved higher in early Friday trading after closing higher on Thursday and is currently trading a few pips above 0.6670.

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