The US Dollar Index is rising during early Thursday trading, ahead of the publication of a batch of American economic data later in the day, with the Non-Farm Payrolls coming tomorrow. NFP’s are perhaps the most important event in the economic calendar for foreign exchange traders, however tomorrow’s number will carry even more weight than usual. The narrative in the markets has been dominated by the risk of high inflation becoming a collateral effect of the ongoing gargantuan stimulus. The Fed has, so far, refused to blink, insisting that any spikes in prices are likely to be temporary and that bringing forward the tapering could damage the economic recovery. Amidst this tug-of-war, employment is likely to become a decisive factor, with a high reading having the potential to force the Fed to start thinking about tapering its current monetary and asset purchase policies. Looking at today’s dollar gains, it appears that many investors are already positioning themselves for such a scenario.
Stock indices slid lower on Thursday, extending losses registered overnight in Asia, amid decreasing appetite for riskier assets ahead of key macro data. Today’s market sentiment is a reaction to the recent hawkish comments from Fed officials about tapering, confirming what many investors have been anticipating for the last couple weeks. However, even if the path to the end of monetary stimulus is getting clearer and clearer, investors will keep an eye on today’s batch of US data ahead of tomorrow’s jobs report. Indeed, a surprise in data, like last month’s NFP release, could also shake market sentiment and increase volatility on many assets. That said, while an increase in market volatility is expected today, any clear market direction is unlikely to be spotted before the end of the week.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.