USD: Limited impact from jobs data – Commerzbank

Commerzbank’s Volkmar Baur argues that the upcoming US labour market report is unlikely to shift expectations for Federal Reserve policy or materially reprice the Dollar.

Commerzbank’s Volkmar Baur argues that the upcoming US labour market report is unlikely to shift expectations for Federal Reserve policy or materially reprice the Dollar. Markets have already scaled back 2026 rate-cut expectations, while inflation gauges and higher petrol prices keep pressure on the Fed. Baur notes that conflict-related uncertainty further limits the report’s forward-looking value for USD pricing.

"It's that time again: the US labour market report is due. However, it is likely to be of only marginal interest today. Last week, the market priced in an interest rate cut by the end of the year." "Just five days ago around two and a half interest rate cuts were still expected this year. But as things stand now, the market is only looking for one and a half now. This means that a lot would have to happen on the labour market today to reverse this trend." "All in all, therefore, there is still no overall picture that necessarily calls for further interest rate cuts.

Added to this is the fact that petrol prices in the at US this week were around 20% above the average price in February. If this continues throughout the month, it would add around 0.3 percentage points to the CPI alone." "On the other hand, if the labour market surprises significantly on the upside, the impact on the market is also likely to remain minor. This is because these labour market figures were, of course, collected before the conflict began.

It is therefore impossible to extrapolate anything forward." "All in all, it is difficult to imagine that the market will significantly reprice the US dollar based on the labour market report – at least not as long as there is no end in sight to the conflict." (This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.) The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts.

The content includes notes by commercial as well as additional insights by internal and external analysts. EUR/USD has reversed part of its earlier pullback and is now edging back towards the key 1.1600 level. The rebound follows a knee-jerk in the US Dollar after the latest NFP report showed the US economy unexpectedly lost 92K jobs in February. Meanwhile, the deteriorating geopolitical backdrop continues to lend support to the Greenback, limiting the pair’s recovery.

GBP/USD is falling back toward 1.3300 in the European session on Friday. A cautious market mood and renewed US Dollar uptick drag the pair lower. The focus now remains on the US NFP data and Middle East headlines for fresh trading incentives.  Gold prices staged a turnaround on Friday, reversing the earlier decline and trading just above the $5,170 mark per troy ounce. The yellow metal continues to draw support from safe haven demand linked to tensions in the Middle East, although gains remain measured as investors weigh the prospect of higher inflation.

After the US and Israel struck Iran, the consensus among most experts was for Bitcoin and the crypto market to see another round of sharp declines. Well, it didn’t happen. And almost one week afterward, crypto appears to be weathering the storm much better than other asset classes considered risky.  February payrolls were much weaker than expected for February. The headline number was -92k, lower than the 55k expected for Feb, and the 130k job increases for January.

The unemployment rate ticked up slightly to 4.4% from 4.3%. After the US and Israel struck Iran, the consensus among most experts was for Bitcoin and the crypto market to see another round of sharp declines. Well, it didn’t happen. And almost one week afterward, crypto appears to be weathering the storm much better than other asset classes considered risky.  Information on these pages contains forward-looking statements that involve risks and uncertainties.

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