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04/10/2024 - 07:04 UTCThe dollar was up for yet another session on Thursday, with the dollar index (USDX) adding another 0.33%, buoyed by geopolitical concerns that increase dollar demand, due to its safe haven properties, as well as positive US jobs data that undermine the possibility for significant rate cuts by the Fed.
The dollar has received a positive boost following the release of Wednesday's ADP private payrolls report, which showed a larger-than-expected increase of 143,000 jobs in the U.S. last month. This comes on the heels of Tuesday's stronger-than-expected job openings data which has increased expectations for a robust nonfarm payroll reading on Friday. As a result, the market may need to reassess its expectations for the pace of Fed rate cuts. For the September government nonfarm payrolls report, economists surveyed by Reuters predict that employers added 140,000 jobs during the month while the unemployment rate remained unchanged at 4.2%.
The market is currently expecting a 50-basis point rate cut by the Federal Reserve in November, with a 32.7% probability according to the CME's FedWatch tool. However, a smaller 25-basis point cut is considered as more likely, with odds standing at 67.3%.
Major U.S. indexes a posted another decline on Thursday as investors grappled with mixed economic signals and geopolitical concerns. The Middle East crisis continues to weigh on risk sentiment, while the upcoming jobs report added to market uncertainty. The US 500, the US 30 and the US tech 100 lost 0.58%, 0.35% and 0.36% by the end of the trading session.
In corporate news, Tesla's stock price continued to decline, dropping 3% on Thursday, following the previous day's losses due to underwhelming third-quarter deliveries. Additionally, the U.S. National Highway Traffic Safety Administration announced a recall of 27,185 Cybertruck vehicles in the United States due to a reduced rear view visibility caused by a delayed rear view image. Meanwhile, NVIDIA Corporation's shares gained over 3% as CEO Jensen Huang revealed in an interview that demand for their upcoming Blackwell AI chips was exceptionally high.
Investors are bracing for market swings upon the release of Friday's crucial nonfarm payrolls report, as the report could influence the market's direction and upcoming Fed decisions. U.S unemployment rate and average hourly earnings will also be in focus.
The EUR/USD pair remained under pressure on Friday and ended the session 0.10% lower, weighed down by a strengthening US Dollar (USD).
The USD gained support following an upbeat US Services Purchasing Managers Index (PMI) report on Thursday. The PMI climbed to 54.9 in September from 51.5 in August, surpassing the market's expectation of 51.7, according to data from the Institute for Supply Management (ISM). In contrast, US Initial Jobless Claims rose by 6,000 to 225,000 for the week ending September 28.
Meanwhile, across the Atlantic, European Central Bank (ECB) policymakers continue to signal the possibility of further rate cuts in response to the challenging economic outlook.
Gold prices bounced back during the mid-North American session on Thursday after hitting a daily low of $2,638. The precious metal climbed to $2,656 as concerns over escalating tensions between Israel and Iran, coupled with a stronger US Dollar (USD), drove demand for safe-haven assets. Meanwhile, diminishing expectations for aggressive policy easing by the Federal Reserve (Fed) further bolstered US Treasury yields.
US President Joe Biden's comments about discussions with Israeli officials regarding potential strikes on Iranian oil facilities added fuel to market uncertainty, pushing gold prices above $2,650.
Oil prices soared on Thursday amid escalating concerns that the growing conflict in the Middle East could disrupt global crude supplies.
Market fears are primarily driven by the possibility of Israel targeting Iranian oil infrastructure, which could provoke retaliation and further destabilize the region. When asked about the potential for Israeli strikes on Iran's oil facilities, U.S. President Joe Biden responded, "We're discussing that," though he added, "There is nothing going to happen today."
Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), produces around 3.2 million barrels of oil per day, accounting for about 3% of global output. Analysts are now weighing the potential for serious supply disruptions.
U.S. main indexes dipped on Thursday as investors reacted to softer labor market data and growing geopolitical tensions in the Middle East, just a day ahead of the crucial monthly jobs report. Investor sentiment has been rattled this week by the escalating conflict in the Middle East.
On the economic front, services activity fell slightly more than expected in September, adding to concerns of a potential slowdown.
Tesla shares fell 3%, extending losses from the previous session. The electric vehicle maker was hit by disappointing third-quarter deliveries and a recall of 27,185 Cybertruck vehicles in the U.S. due to a delayed rearview camera image that reduces visibility. Meanwhile, Nvidia shares jumped more than 3%, fueled by optimism over high demand for its next-generation Blackwell AI chips.
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