Market Turbulence as Strong US Job Growth Drives Dollar Lower

US job growth drives the dollar lower; the Asian session focuses on unemployment claims and Fed speeches for market direction.

The latest economic reports from the United States paint a picture of robust job growth and expanding business activity, sending ripples through currency markets and shaping expectations for the upcoming Asian session.

According to the ADP employment report released on Wednesday, the US economy added 184,000 jobs in March, surpassing estimates of 148,000. This surge marked the highest increase in hiring since July of the previous year. The leisure and hospitality sector led the gains, indicating a broad-based recovery across industries. Additionally, construction, financial services, and manufacturing sectors recorded higher pay gains, signaling increasing wage pressures.

Similarly, the ISM Services PMI report highlighted the 15th consecutive month of expansion in the sector, with strong readings in business activity, new orders, and new export orders. While prices increased, the pace was slower than the previous month, fueling concerns about ongoing inflationary pressures.

At Stanford’s Business, Government, and Society Forum, Federal Reserve Chairman Jerome Powell reiterated the central bank’s cautious approach toward interest rate adjustments. Despite recent data showing higher-than-expected inflation, Powell emphasized the need for more evident signs of inflation easing before considering any policy changes.

Market Turbulence as Strong US Job Growth Drives Dollar Lower

In response to the positive economic data, the US Dollar Index (DXY) initially sold off, dropping from 104.75 to 104.25. This decline marked the second consecutive day of significant decline, reflecting the market reaction to the news.

In the upcoming Asian session, the market focus will be on key events such as Unemployment Claims and speeches by Federal Reserve officials Barkin and Mester. Continuing lower-than-expected jobless claims could bolster the dollar, while hawkish remarks from the Fed officials may provide further support after recent sell-offs.

Meanwhile, other major currencies are experiencing mixed sentiments. The Australian Dollar (AUD) and New Zealand Dollar (NZD) continue their bullish momentum, buoyed by solid rebounds and positive central bank outlooks. Conversely, the Japanese Yen (JPY) remains weak against the dollar, with USD/JPY hovering around key resistance levels.

In Europe, the Euro (EUR) faces pressure amid expectations of a contraction in the final reading of the Composite PMI for March. Despite the European Central Bank’s unchanged interest rates, concerns linger over subdued economic activity and inflation.

Easing inflationary pressures in Switzerland may lead to further weakness in the Swiss Franc (CHF). At the same time, the Pound (GBP) could see support if the Composite PMI rises to the upside, indicating stronger economic growth in the UK.

In the commodity market, oil prices remain elevated despite unexpected inventory builds, driven by supply disruption concerns in the Middle East and OPEC+ production cuts.

Overall, the US dollar’s performance in the Asian session will likely be influenced by incoming economic data and central bank rhetoric, setting the tone for currency markets in the near term.

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