US February jobs report to ramp up market volatility

Markets stay cautious early Friday as participants refrain from taking large positions while waiting for the February US jobs report, which could have significant implications on the US Federal Reser’s rate outlook. The US Dollar Index holds steady above 105.00 following Thursday’s decline and US stock index futures trade in negative territory. Statistics Canada will also release labour market data for February and European Central Bank (ECB) President Christine Lagarde will be delivering a speech later in the day.

On Thursday, the data published by the US Department of Labor revealed that weekly Initial Jobless Claims rose by 21,000 to 211,000 in the week ending March 4. Despite the risk-averse market environment, the US Dollar struggled to find demand in the American session. With the benchmark 10-year US Treasury bond yield losing more than 2% on the day, the USD continued to weaken against its major rivals.

Early Friday, the 10-year US T-bond yield continues to push lower and was last seen losing more than 2% on the day at 3.82%. The USD, however, stays resilient for the time being. Nonfarm Payrolls in the US are forecast to rise by 205,000 in February following January’s impressive increase of 517,000. Annual wage inflation, as measured by the Average Hourly Earnings, is forecast to edge higher to 4.7% from 4.4% in January.

Following Thursday’s rebound, EUR/USD moves up and down in a narrow range slightly below 1.0600 in the European morning. Lagarde is unlikely to comment on the policy outlook later in the day because the ECB is already in the ‘quiet period.’

GBP/USD trades modestly higher on the day near 1.1950 early Friday after the UK’s Office for National Statistics announced that the real Gross Domestic Product expanded by 0.3% in January, surpassing the market expectation of 0.1%. On a negative note, Manufacturing Production and Industrial Production contracted by 0.4% and 0.3% in the same period, respectively.

As expected, the Bank of Japan (BoJ) left its policy settings unchanged following the last policy meeting led by outgoing Governor Haruhiko Kuroda. In the press conference, Kuroda repeated that they won’t hesitate to ease the monetary policy further if necessary but these comments failed to trigger a meaningful market reaction. At the time of press, USD/JPY was marginally higher on the day at 136.40.

USD/CAD extended its weekly rally on Thursday and touched its highest level since October at 1.3850 on Friday before retreating to 1.1830. The Unemployment Rate in Canada is forecast to tick up to 5.1% in February from 5% in January with the Net Change in Employment coming in at +10K.

Gold price capitalized on falling US T-bond yields on Thursday and recovered above $1,830. XAU/USD fluctuates in a tight channel slightly above $1,830 early Friday.

Bitcoin lost more than 6% on Thursday and continued to stretch lower early Friday. BTC/USD was last seen testing $20,000, where it was down nearly 2% on the day. Ethereum broke below $1,500 and touched its weakest level in nearly two months at $1,392 before recovering slightly above $1,400 on Friday.

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