US DOLLAR TRADERS TURN CAUTIOUS AHEAD OF US JOB REPORT

The US Dollar does not get any tailwinds from market pricing in more rate hikes.

All eyes turn to Nonfarm Payrolls data on Friday. 

The US Dollar Index hovers near 103.00 in search of direction.

The US Dollar (USD) is unable to bank on the additional rate increase that markets are starting to get priced in for the US, with US Fed Futures showing a rise in the probability  of a second hike in November. Although this should not come as a surprise to the markets, the sudden concern has pushed equities around the world in the red for this week and it weighs on the Greenback as well, which is unable to retain its status as safe haven. The quote board shows a very dispersed Greenback, with only smaller gains and rather larger losses against most traded currencies. 

On the economic data front, only one big event, or rather a whole report of data set to come out. With the first Friday of the month comes the US jobs report, with all eyes on the change in Nonfarm payrolls. After the positive slew of data from ADP private payrolls and the stronger ISM services numbers, the question will be if the Nonfarm Payrolls report will be strong enough as expectations are tilting towards an upside surprise.  

Daily digest: US Dollar to face US jobs data

Main data point for this Friday comes from the US Bureau of Labor Statistics with the US Nonfarm Payroll number print for June expected to come in at 225,000, lower than the previous 339,000 increase. Average Hourly Earnings will get the attention next with the monthly number expected to be unchanged at 0.3%, while the yearly increase is expected to decline slightly  from 4.3% to 4.2%. 

A quick sidenote for the Nonfarm Payroll number: the lowest estimate comes in at 110,00 while the highest estimate tops out at 350,000. The US Dollar will either devalue substantially should the actual number come out below the lowest estimation, while an appreciation of the Greenback is expected should the actual number break above the high estimate of 350,000.

US Treasury Secretary Janet Yellen said in Beijing that the US seeks to diversify, not decouple with China. Any US security measures are activated to protect national security, not to gain an economic edge on China. 

Another red day for Asian equities, with the Japanese Topic down0.97% and the Hang Seng losing 1%. European equities are not fully taking over the sour tone and are rather flat than selling off. A similar pattern can be seen for US equity futures, which are trading at marginal losses. 

The CME Group FedWatch Tool shows that markets are pricing in a 89.9% chance of a 25 basis points (bps) interest-rate hike on July 26. Chances of a second hike in November are up 36.7% at the moment. So no full conviction just yet, though probabilities are rising. 

The benchmark 10-year US Treasury bond yield trades at 4.03% in European morning trading as the milestone of 4% got broken on Thursday with a peak at 4.08%