Market Watch: Greenback Looks Vulnerable

Financial and commodity markets analytics

As the market waits for the October employment report, the US dollar is trading in narrow ranges. This week, the Dollar Index has fallen by about 0.5%. It is slightly weaker than nearly all G10 currencies within the narrow ranges.
Asia Pacific and European stocks are up today. Hong Kong shares and mainland stocks rose more than 2%, leading the region. US index futures have a heavier start to the day after yesterday's sharp rise.
WTI December extended yesterday's recovery slightly, but remains within the Wednesday range ($80.30 - $83.40). Gold has also been consolidating within the midweek range.

Asia Pacific
The dollar has been restricted to a very narrow range today, just before the US jobs report. It is between JPY150.25 and JPY150.55.
The Aussie currency is also trading in a narrow range today. It's at the upper end yesterday's range but below $0.6450. The Australian dollar has reached its highest level since September due to increased speculation that the Reserve Bank of Australia may raise rates next week. Today's reports serve as a reminder that the Australian economy is weakening. Yesterday's report showed that exports had fallen for the third time in four months in September.

The unemployment rate in September rose to 6.5%, up from 6.4%. It has fluctuated between 6.4% and 6,5% since the first quarter of 23. The unemployment rate has never been lower than it is now. The swaps market brought the first rate reduction forward.
The euro has been in a narrow range today ($1.0615 -$1.0650), despite a better bid this morning in Europe.

As widely expected, the Bank of England kept its policy unchanged (6-3 vote). The Bank of England offered a more gloomy economic outlook. The BOE now expects Q3 GDP to be flat, as reported on 10 November (in August they projected a 0.4% increase) and the economy to grow 0.1% in Q4. The BOE expects that the economy will stagnate next year, rather than grow by 0.5% like it predicted three months earlier.
Sterling did reach a new weekly high near $1.2225 despite the BOE's gloomy forecast. Today, it has held above $1.2185 but below $1.2215.

The US reported that Q3 productivity was up 4.7% (after an upwardly revised Q2 of 3.6%) and unit labor costs were down 0.8% (compared to the median Bloomberg survey forecast for a 0.3%).
The nonfarm payrolls report for today is the main event.

Canada reports on the labor market for last month. Overall, the Canadian labor markets appears to be in good condition. In September, the Canadian labor market created 43k jobs per month on average, of which 27,2k were full-time.
Yesterday, the Canadian dollar rose by 0.85%. This was its largest advance in several months. The Canadian dollar's rise was not a result of Canadian events, but rather the general decline in the US Dollar.