What You Need to Know on Friday, November 7th
The United States dollar (USD) experienced a dip against key rivals on Thursday, but found some stability on Friday morning in Europe. Economic reports are on the way later today, including Canadian employment statistics and the University of Michigan’s November Consumer Confidence Index for the U.S.
USD Price This Week
The table below provides a snapshot of how the US dollar has fluctuated against major currencies this week. Notably, the USD showed strength against the New Zealand dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.02% | 0.15% | -0.37% | 0.74% | 0.98% | 2.07% | 0.38% | |
| EUR | 0.02% | 0.16% | -0.28% | 0.76% | 0.98% | 2.08% | 0.40% | |
| GBP | -0.15% | -0.16% | -0.60% | 0.60% | 0.82% | 1.92% | 0.23% | |
| JPY | 0.37% | 0.28% | 0.60% | 1.08% | 1.32% | 2.42% | 0.87% | |
| CAD | -0.74% | -0.76% | -0.60% | -1.08% | 0.17% | 1.29% | -0.36% | |
| AUD | -0.98% | -0.98% | -0.82% | -1.32% | -0.17% | 1.09% | -0.58% | |
| NZD | -2.07% | -2.08% | -1.92% | -2.42% | -1.29% | -1.09% | -1.65% | |
| CHF | -0.38% | -0.40% | -0.23% | -0.87% | 0.36% | 0.58% | 1.65% |
The heat map illustrates the percentage changes between key currencies, with the base currency listed in the left column and the quote currency across the top. For example, if you look at the USD against the JPY, the percentage in the box indicates its change.
The U.S. dollar faced downward pressure late Thursday after a report from Challenger, Gray & Christmas revealed that American employers cut over 150,000 jobs in October—the largest reduction for that month in over two decades. Tech companies and the retail and services sectors were particularly affected. As a result, major Wall Street indices saw significant losses, and the USD index declined by about 0.5% daily. By early Friday, the index steadied around 99.80.
The Bank of England opted to maintain its policy interest rate at 4% in November, a move anticipated by the market. However, the policy statement indicated that four Monetary Policy Committee members favored a 25 basis points cut. Initially, this decision proved challenging for the pound, but cautious remarks from Governor Andrew Bailey regarding future rate cuts shifted the atmosphere. He mentioned, “A consistent downward trend in inflation is necessary before we consider further cuts,” also expressing hope that rising non-wage labor costs would help contain service price inflation. The GBP/USD pair dropped slightly early Friday but hovered above 1.3100 after a nearly 0.7% rise on Thursday.
Meanwhile, EUR/USD saw a small recovery, with the euro gaining about 0.5% on Thursday, riding the wave of broader weakness in the U.S. dollar. Trading remained relatively stable, staying in a narrow band below 1.1550.
On the Chinese front, data released early Friday noted a 1.1% increase in exports year-over-year in October, with imports growing by 1%—both figures falling short of analysts’ predictions. Following a tough day Thursday, AUD/USD climbed back towards 0.6500.
Gold prices stayed above $4,000 after a slight upswing on Thursday.
As for USD/JPY, it dropped nearly 0.7% on Thursday, but then gained ground, currently trading around 153.50.
Employment FAQ
Understanding labor market conditions is crucial for assessing economic health and influences currency valuation. High employment or low unemployment generally boosts consumer spending, spurring economic growth and enhancing local currency strength. A tight labor market can also impact inflation as high demand meets limited supply, leading to increased wages.
Policymakers closely monitor wage growth. Rising wages indicate households have more disposable income, which often drives up consumer goods prices. Unlike volatile factors like energy prices, wage increases are viewed as a foundational component of persistent inflation, as they tend to be more stable. Central banks worldwide consider wage growth data vital for crafting monetary policy.
The focus that central banks place on labor market conditions can vary based on their goals. Some banks have clear duties related to labor markets, while others, like the U.S. Federal Reserve, aim for both maximum employment and price stability. In contrast, the European Central Bank’s sole mission is to control inflation. Still, no matter their specific mandates, labor market conditions play a significant role due to their significance for economic health and their direct link to inflation.
(This article was corrected at 08:34 GMT on 7 November to clarify that the Challenger job cuts data was released on Thursday, not Tuesday.)
