Here’s what you need to know on Thursday, November 20:
the US Dollar (USD) The Federal Reserve outperformed its rivals midweek, as minutes from the Federal Reserve’s October policy meeting bolstered expectations for policy stability in December. The US dollar held steady early Thursday as investors awaited the September employment report, which will include non-farm payrolls numbers and the unemployment rate.
US dollar price this week
The table below shows the percentage change in the US Dollar (USD) against the major currencies listed this week. The US dollar was the strongest against the Japanese yen.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | 0.90% | 0.76% | 1.97% | 0.24% | 0.85% | 1.19% | 1.55% | |
| euro | -0.90% | -0.04% | 1.42% | -0.64% | -0.06% | 0.31% | 0.66% | |
| GBP | -0.76% | 0.04% | 1.19% | -0.61% | -0.02% | 0.34% | 0.70% | |
| JPY | -1.97% | -1.42% | -1.19% | -1.70% | -1.09% | -0.77% | -0.45% | |
| Canadian | -0.24% | 0.64% | 0.61% | 1.70% | 0.62% | 0.96% | 1.31% | |
| Australian dollar | -0.85% | 0.06% | 0.02% | 1.09% | -0.62% | 0.37% | 0.70% | |
| New Zealand dollar | -1.19% | -0.31% | -0.34% | 0.77% | -0.96% | -0.37% | 0.36% | |
| Swiss franc | -1.55% | -0.66% | -0.70% | 0.45% | -1.31% | -0.70% | -0.36% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select USD 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).
The Fed said in the minutes of its October meeting that many policymakers believe that, given their expectations, it would be appropriate to keep interest rates unchanged for the rest of the year. “Most participants noted that further interest rate cuts could increase the risk that higher inflation becomes entrenched or could be misinterpreted as failure to adhere to the 2% inflation target,” the post said. The US Dollar Index gained upward momentum late in the US session and rose to a two-week high above 100.00. Early on Thursday, US dollar index Holds on to modest gains near 100.30.
Meanwhile, US stock index futures rose sharply in the European morning as investors cheered Nvidia’s earnings report, which showed better-than-expected revenue for the third quarter and a stronger-than-expected sales outlook for the fourth quarter. At the time of writing, Nasdaq futures were up nearly 2% on the day.
EUR/USD It lost nearly 0.4% on Wednesday and closed for the fourth straight day in negative territory. The pair is still in decline early Thursday and is falling towards the 1.1500 level.
GBP/USD It fell sharply on Wednesday and closed below the 1.3100 level for the first time since early November. The pair is struggling to make a recovery in the European morning on Thursday and is fluctuating in a narrow range, just above 1.3050.
USD/JPYThe bullish rally gained momentum in the US session on Wednesday and continued into the Asian session on Thursday. The pair was last seen trading at its highest level since mid-January above 157.50, up about 2% on a weekly basis. Japanese Chief Cabinet Secretary Minoru Kihara said in a statement on Thursday that he is watching the movements of the foreign exchange market with a great sense of urgency.
After rising above $4,100 early Wednesday, gold It reversed its trend in the second half of the day and erased a large part of its gains. The XAU/USD pair was lower in the European morning on Thursday and is trading just above the $4,050 level.
Frequently asked questions about non-farm payrolls
Nonfarm Payrolls (NFP) are part of the monthly jobs report released by the U.S. Bureau of Labor Statistics. The nonfarm payrolls component specifically measures the change in the number of people employed in the United States during the previous month, excluding the agricultural industry.
The nonfarm payrolls number could influence the Fed’s decisions by providing a measure of how well the Fed is meeting its mandate of promoting full employment and 2% inflation. A relatively high NFP number means that more people are working, earning more money, and therefore likely spending more. On the other hand, a relatively low non-farm payrolls result may mean that people struggle to find work. The Fed typically raises interest rates to combat high inflation caused by low unemployment, then lowers them to stimulate a sluggish labor market.
In general, non-farm payrolls are positively correlated with the US dollar. This means that when salary numbers appear higher than expected, the US dollar tends to rise and vice versa when they are lower. Nonfarm payrolls affect the US dollar by virtue of their impact on inflation, monetary policy expectations, and interest rates. A rise in non-farm payrolls usually means that the Fed will be more hawkish in its monetary policy, which supports the US dollar.
Nonfarm payrolls are generally negatively correlated with the price of gold. This means that higher than expected salary numbers will have a negative impact on the price of gold and vice versa. Rising non-farm payrolls generally have a positive impact on the value of the US dollar, and like most major commodities gold is priced in US dollars. If the US dollar rises in value, it will take fewer dollars to buy an ounce of gold. Higher interest rates (which have traditionally helped increase nonfarm payrolls) also reduce gold’s appeal as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls are only one component within the larger payrolls report and can be overshadowed by others. Sometimes, when the US non-farm payrolls report is higher than expected, but average weekly earnings are lower than expected, the market has ignored the potential inflationary impact of the headline result and interpreted the earnings decline as deflationary. The components of the participation rate and average weekly hours can also influence the market reaction, but only in rare cases such as the “big resignation” or global financial crisis.
