The dollar is defensive against majors after falling on Thursday on downbeat manufacturing data. US Manufacturing PMI surprised on contraction to 49.4 in August, well below forecast at 54.5 and previous month’s 55.0 release.
The greenback pulled back after making solid gains this week, driven by strong data and traders’ bets on an early rate hike by Federal Reserve.
The Euro bounced to 1.1200 barrier on weaker dollar, while Sterling was among top performers on Thursday, supported by upbeat UK manufacturing data. Pound rose to fresh one month high against the dollar at 1.3315.
Dollar was down about 100 pips against Japanese yen on Thursday, when pullback tested 103 support, but regained positive footing in early Friday’s trading.
Spot Gold bounced from fresh near five-weeks low at $1302 that threatened psychological $1300 support, but maintains overall bearish tone ahead of today’s US NFP data.
Crude oil remains the top loser, being in steep descend for five consecutive days, going for the biggest weekly loss since mid-January. Oil prices remain pressured by global oversupply, with recent strong rise in US oil inventories. Also, the price got pressured on Russia’s comments on playing down output freeze.
WTI oil trades off Thursday’s three-week low at $42.99, while Brent oil posted two-week low at $48.22 on Friday’s fresh bearish acceleration that signals break below near-term congestion.
The US dollar trades off session lows in early Friday’s European trading, with rising excitement in the markets about today’s release of US jobs data. Solid numbers are expected in August, with forecast at 180K vs July’s 255K rise, while unemployment rate is expected to tick lower to 4.8% in August from 4.9% in July.

Jobs data are closely watched as any readings in line or above expectations would reinforce views that US economy has regained traction after nearly stalling in the first half of the year. Firm jobs data are expected to also boost hopes of Fed’s monetary policy action by the end of the year, as today’s jobs report comes nearly three weeks ahead of FOMC September policy meeting, due on Sep 20/21.
Highlights of the day

Europe
Calendar for Friday is light in Europe with UK Construction PMI being key release. Forecast for August stands at 46.1, above July’s 45.9 release, with solid numbers today, expected to further boost positive sentiment of British pound, which was underpinned by recent positive data.

America

US Non-Farm Payrolls
The chances of US interest rate hike this month have risen sharply since Janet Yellen spoke in Jackson Hole last week. Friday’s labour statistics could shorten the odds even further. The latest consensus forecasts from analysts suggest August’s payroll figure will come in at 180,000, down from 255,000 in July, which beat estimates.

US factory orders
Analysts expect a 2% rise in July, up from a 1.5% decline in June that marked the second monthly fall in a row. The US factory orders ex-transportation figure is expected to come in at 0.2%, slowing from 0.4% in June.
Important levels

EURUSD
The pair consolidates under 1.1200 zone that marks near-term recovery action top. Near-term structure has strengthened on recent dollar’s weakness, with the pair capable of extending recovery leg on firm break above 1.1200/25 that would open barriers at 1.1268 and 1.1300, with spike high at 1.1339, expected to come in focus on stronger acceleration.
Initial support lies at 1.1176, followed by former range tops at 1.1164, with firm break lower to turn focus towards fresh low at 1.1122.

GBPUSD
Cable consolidates after strong rally on Thursday that cracked key resistance at 1.3277 and peaked at 1.3315. The pair maintains strong bullish sentiment for further bullish extension towards next breakpoint at 1.3369 and possible stretch towards key short-term resistances at 1.3500 zone.
Immediate support lies at 1.3260, followed by 1.3200 zone and 1.3155 pivot. Release of US jobs data is expected to give more clues about pair’s near-term direction.

US Crude Oil
Oil cracked $43.00 support on uninterrupted five-day fall from $48.44 lower top. Further extension of the wave from $48.44 could extend to 42.37 (Fibonacci 200% expansion), possibly to $41.09 trough.
Initial resistance lies at $43.67, with strong barrier at $44.29 (daily Kijun-sen line), expected to cap corrective attempts., Market Analysis