US Dollar retreats slightly ahead of Nonfarm Payrolls release

LONDON (May 2) The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, is seeing some rejection and heads back to 99.75 at the time of writing on Friday after a false break above the 100-marker. The Greenback is softening a touch on the back of headlines that China is considering to start tariff negotiations with the Trump administration. As markets navigate news of trade negotiations, they are still eagerly awaiting the real first official trade deal.

Regarding the Ukraine-Russia war, the mineral deal between the US and Ukraine was signed, a much smaller one in terms of capital potential for the United States and not military guarantees for Ukraine whatsoever, Bloomberg reported. 

On the economic calendar front, the focus heads to the Nonfarm Payrolls (NFP) release for April.  Expectations are still for a positive print, with the lowest estimate coming in at 50,000 and the highest estimate at 171,000. That means any print below the 50,000 number could be enough to send the DXY lower, while a number above 171,000 could see ample amount of US Dollar strength. 

Daily digest market movers: Asian trade talks and NFP

• Japanese Finance Minister Katsunobu Kato said this Friday that the Japanese holdings of US debt  are a tool for negotiating with the Trump administration, explicitly raising for the first time its leverage as a massive creditor to the United States in its negotiations, Reuters reported. 
• In a Friday statement, China’s Commerce Ministry said that it had noted senior US officials repeatedly expressing their willingness to talk to Beijing about tariffs, and urged officials in Washington to show “sincerity” toward China. The ministry added “the US has recently sent messages to China through relevant parties, hoping to start talks with China,” and “China is currently evaluating this”, Bloomberg reports.
• At 12:30 GMT, the Nonfarm Payrolls report will be published:
• • The Payrolls print is expected to come in at 130,000 against the previous 228,000.
  • The Unemployment rate is expected to remain stable at 4.2%.
  • Monthly Average Hour Earnings are expected to grow at a steady pace of 0.3%.
• Equities in Europe have taken over the positive tone and are up over 1% on the day. US equity futures look more sluggish. 
• The CME FedWatch tool shows the chance of an interest rate cut by the Federal Reserve in May's meeting stands at 7.6% against a 92.4% probability of no change. The June meeting sees a 65.1% chance of a rate cut. Should Nonfarm Payrolls be a big beat on the estimated number, expect rate cut expectations to be unwound, while a miss might see rate cut expectations for June and even May soar. 
• The US 10-year yields trade around 4.21%, erasing past weeks’ softening as traders look for clues on potential rate cut projections from the Federal Reserve. 

FXStreet