Forex News
- US job creation beats expectations in April, with 115K new jobs added versus 62K expected.
- The US Dollar weakens despite solid employment data as markets focus on easing geopolitical tensions.
- Pound Sterling remains supported despite Labour Party losses in UK local elections.
GBP/USD advances around 1.3630 on Friday at the time of writing, up 0.54% on the day, benefiting from broad US Dollar weakness following the release of the US employment report.
The Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls (NFP) increased by 115K in April, well above market expectations of 62K. March’s figure was also revised higher to 185K from the previously reported 178K. Meanwhile, the Unemployment Rate remained steady at 4.3%, in line with forecasts.
Annual Average Hourly Earnings growth came in at 3.6%, below the 3.8% expected, easing inflation concerns and supporting expectations that the Federal Reserve (Fed) could still move toward monetary easing in the coming months.
Investors are also favoring risk-sensitive assets amid persistent optimism surrounding discussions between the United States (US) and Iran, despite reports that the US military carried out airstrikes targeting several tankers near the Strait of Hormuz. As a result, the US Dollar Index (DXY) falls toward 97.90 despite the resilience of the US labor market.
On the UK side, the Pound Sterling (GBP) remains relatively stable despite the first results from local elections in the United Kingdom (UK). Prime Minister Keir Starmer’s Labour Party has lost control of several local councils, while Nigel Farage’s Reform UK continues to make strong gains. Nevertheless, Starmer stated on Friday that he is not considering resignation.
Comments from the Bank of England (BoE) are also providing support to the British currency. Governor Andrew Bailey warned that the central bank could act “forcefully” if Middle East tensions continue to drive energy prices and inflationary pressures higher. The BoE kept its policy rate unchanged at 3.75% at its latest meeting while leaving the door open to further tightening if needed.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.43% | -0.48% | -0.23% | 0.30% | -0.46% | -0.40% | -0.41% | |
| EUR | 0.43% | -0.06% | 0.20% | 0.73% | -0.03% | 0.08% | 0.05% | |
| GBP | 0.48% | 0.06% | 0.26% | 0.80% | 0.02% | 0.13% | 0.10% | |
| JPY | 0.23% | -0.20% | -0.26% | 0.55% | -0.25% | -0.15% | -0.16% | |
| CAD | -0.30% | -0.73% | -0.80% | -0.55% | -0.79% | -0.69% | -0.70% | |
| AUD | 0.46% | 0.03% | -0.02% | 0.25% | 0.79% | 0.11% | 0.08% | |
| NZD | 0.40% | -0.08% | -0.13% | 0.15% | 0.69% | -0.11% | -0.03% | |
| CHF | 0.41% | -0.05% | -0.10% | 0.16% | 0.70% | -0.08% | 0.03% |
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).
- Consumer confidence is expected to ease in May.
- One-year inflation expectation cooled a tad to 4.5%.
American consumer confidence is expected to have deflated in early May, as households have become more pessimistic about current conditions and the broader economic outlook, according to preliminary data from the University of Michigan.
The closely watched Consumer Sentiment Index receded to 48.2 from 49.8 in the previous month, missing economists’ expectations (49.5) and signalling some weaknening in public confidence.
Furthermore, the Current Conditions index edged lower to 47.8 from 52.5, while the Expectations gauge improved marginally to 48.5 from 48.1, highlighting a tepidly upbeat scenario for the months ahead.
Inflation expectations, meanwhile, appear to have cooled somewhat: the one-year outlook eased to 4.5% (from 4.7%), and the five-year forecast decelerated to 3.4% (from 3.5)%.
Market reaction
The US Dollar remains well offered, flirting with the area of multi-week lows and sending the US Dollar Index (DXY) back below the 98.00 threshold.
- EUR/USD strengthens as mixed US labor market data keeps pressure on the US Dollar
- Markets remain cautiously optimistic over a potential US-Iran deal despite ongoing tensions around the Strait of Hormuz.
- The US Dollar Index slides back toward pre-war levels as safe-haven demand eases.
The Euro (EUR) strengthens against the US Dollar (USD) on Friday as the Greenback remains under pressure following mixed US labor market data. At the time of writing, EUR/USD is trading around 1.1777, up roughly 0.44% on the day.
Data released by the US Bureau of Labor Statistics (BLS) showed that Nonfarm Payrolls (NFP) increased by 115K in April, beating market expectations of 62K but slowing from March’s 185K gain (revised from 178K). Meanwhile, the Unemployment Rate held steady at 4.3%, in line with market expectations.
Average Hourly Earnings rose 0.2% MoM in April, missing expectations of 0.3% and matching the previous reading. Annual wage growth accelerated to 3.6% from 3.4%, though it remained below the 3.8% forecast.
Taken together, the data is expected to support the Federal Reserve’s cautious approach, reinforcing expectations that policymakers may remain patient before resuming monetary policy easing, particularly as upside risks to inflation have risen amid elevated Oil prices and ongoing tensions in the Middle East.
However, markets remain cautiously optimistic that the US and Iran could eventually reach a deal to end the war, despite fresh reports of clashes between US and Iranian forces near the Strait of Hormuz.
US President Donald Trump downplayed the latest tensions on Thursday, saying the ceasefire remains in place as Washington awaits Iran’s response to the latest US proposal, with Tehran expected to deliver its reply through Pakistani mediators in the coming days.
This cautious optimism is weighing on the Greenback, which has slipped back toward pre-war levels as investors scale back safe-haven demand for the US Dollar. As a result, EUR/USD remains on track to end the week in positive territory for the second consecutive week.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 97.90, down roughly 0.40% on the day.
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.
Commerzbank’s Bernd Weidensteiner notes that United States (US) employment rose by 115,000 in April, beating expectations and signaling a recovery after prior weakness. The six‑month average of job gains is picking up again, supported by strong corporate profits and favorable financing conditions. He expects the US economy to weather the global energy crisis relatively well as hiring and wages firm.
Jobs and wages point to resilience
"Employment rose by 115,000 in April. This was significantly higher than expected (consensus +65,000, Commerzbank forecast +50,000), even though revisions show that employment in February and March combined is 16,000 lower than previously reported."
"After employment figures had alternated between increases and decreases over the past eleven months, a decline in jobs would actually have been expected in April. However, we had already noted beforehand that there were some signs that the labor market was improving."
"Furthermore, according to the Atlanta Fed’s median wage tracker, wages rose at a slightly faster pace again, suggesting a tighter labor market. And finally, according to the Conference Board’s survey, consumers are once again viewing the labor market in a slightly more positive light."
"At the same time, corporate profits rose sharply in the first quarter, which typically leads to strong investment and new hiring. As a result, the U.S. economy should weather the global energy crisis relatively well."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- UK investors show renewed interest in Gold ETFs, with more than $2 billion in inflows in April
- Stable Gold prices, a less-than-expected hawkish BoE, and falling equity prices likely drove increased interest in Gold ETFs.
- Rising ETF demand tends to support spot prices, which have been hovering between $4,400 and $4,900 since late March.
Inflows returned to global Gold ETFs in April, with funds from the United Kingdom (UK) leading the surge, as the price of the precious metal stabilized after March’s sharp decline.
Global physically backed Gold ETFs recorded inflows of $6.6 billion in April, according to data from the World Gold Council (WGC). This represents a sharp rebound from March, when ETFs registered a significant sell-off. Positive flows via ETFs are a bellwether for spot prices as investor demand via ETFs tends to directly impact the physical market.
By country, the UK registered inflows of more than $2.1 billion, followed by the United States ($845 million) and Hong Kong ($732 million), the WGC report shows. In overall Europe, funds saw a large inflow of $3.7 billion in April, flipping their year-to-date total from negative to positive.
Positive flows in the UK, and broadly in Europe, appeared linked to heightened geopolitical and geoeconomic risks, as investors assessed the inflationary implications of a more protracted Iran conflict and the associated pressure on energy prices, the WGC report said.
“With local equities retreating and the Bank of England (BoE) less hawkish than expected, investor interest in Gold likely strengthened as prices recovered and stabilised,” it added.
Gold prices have traded broadly rangebound since the end of March, within a band of between $4,400 and $4,900. While geopolitics keeps the precious’ metal safe-haven appeal intact, the quick hawkish repricing of global central banks’ rate outlook is also capping gains.
April’s ETF rebound shows that Gold has somewhat regained its safe-haven appeal. While investor demand through ETFs could keep providing a solid floor for the precious metal, any significant gains would need a decline in energy prices and messages from central banks that the current plans to keep interest rates at high levels are no longer on the table.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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