US Dollar Rises Ahead of Employment Report

The United States (US) dollar rose against its major trading partners, except for a decline versus the Canadian dollar, early Friday as markets prepare for the release of the November employment report.

Nonfarm payrolls are expected to rise by 183,000 in November after an increase of 150,000 jobs in October, while the unemployment rate is forecast to hold steady at 3.9%. Hourly earnings are seen up 0.3%.

Following the employment report, the preliminary University of Michigan consumer sentiment index for December is set to be released. The St. Louis Federal Reserve’s gross domestic product Nowcast estimate for Q4 is expected to be updated later in the day.

Federal Reserve officials remain in their ‘quiet period’ ahead of the two-day Federal Open Market Committee meeting Dec. 12-13.

Currently, the CME FedWatch Tool shows a 97.7% chance being priced in by markets of no change to the current 5.25% to 5.50% federal funds rate target range at the December meeting, with a 2.3% chance of a 25 basis point rate increase to 5.50% to 5.75%. Markets are pricing in a 60.2% chance of rate cuts by the March 19-20 meeting.

A quick summary of foreign exchange activity heading into Friday showed that USDEUR fell to 1.0783 from 1.0794 at the Thursday US close but was still up from a level of 1.0771 at the same time Thursday morning.

There are no EU data on Friday’s schedule. The next European Central Bank policy meeting is scheduled for Dec. 14.

GBPUSD fell slightly to 1.2583 from 1.2594 at the Thursday US close, remaining above a level of 1.2572 at the same time Thursday morning. A UK inflation outlook survey released overnight showed a modest slowdown in one-year price expectations in December. The next Bank of England policy meeting is scheduled for Dec. 14.

USDJPY rose to 144.4183 from 144.1459 at the Thursday US close but was down from 145.1246 at the same time Thursday morning. Japanese Q3 real GDP declined and was below the same quarter a year ago, data released overnight showed. The next Bank of Japan policy meeting is scheduled for Dec. 18-19. Nigeria Eurobond Slumps after CBN Resumes OMO Auction

USDCAD fell to 1.3579 from 1.3600 at the Thursday US close and 1.3601 at the same time Thursday morning. Canada capacity utilization data for Q3 is set to be released today. The next Bank of Canada meeting is scheduled for Jan. 24.