United States Dollar Index faces pressure as traders reconsider hawkish Fed bets

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the New Zealand Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.06%	-0.10%	0.06%	-0.07%	-0.16%	-0.21%	-0.08%
EUR	0.06%		-0.04%	0.11%	-0.02%	-0.15%	-0.15%	-0.02%
GBP	0.10%	0.04%		0.13%	0.00%	-0.11%	-0.09%	0.02%
JPY	-0.06%	-0.11%	-0.13%		-0.11%	-0.25%	-0.28%	-0.13%
CAD	0.07%	0.02%	-0.00%	0.11%		-0.15%	-0.15%	-0.00%
AUD	0.16%	0.15%	0.11%	0.25%	0.15%		-0.00%	0.13%
NZD	0.21%	0.15%	0.09%	0.28%	0.15%	0.00%		0.13%
CHF	0.08%	0.02%	-0.02%	0.13%	0.00%	-0.13%	-0.13%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

According to the CME FedWatch tool, the odds of the Fed delivering at least one interest rate hike in the September policy meeting have diminished to 53.2% from almost 64% seen on Wednesday.

Traders have trimmed hawkish Fed bets as the US NFP data missed expectations by a wide margin. In June, the US economy created 57K fresh jobs, significantly lower than estimates of 110K. Also, the May data was revised lower to 129K from 172K. However, the Unemployment Rate dropped to 4.2% against the estimates and the previous reading of 4.3%.

Average Hourly Earnings, a key measure of wage growth, rose by 3.5% Year-on-Year (YoY), as expected, faster than the previous reading of 3.4%.

Going forward, the next major trigger for the US Dollar will be the US ISM Services Purchasing Managers’ Index (PMI) data for June, which will be released on Monday. Investors will pay close attention to the data, as the Service PMI, which reflects activities in the services sector, accounts for two-thirds of the economy.

Economic Indicator

Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Why it matters to traders?

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.