U.S. dollar index inches higher in anticipation of Friday’s jobs data

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  • At the midpoint of the trading week, market participants see the U.S. dollar index inching higher and higher. Over the last six trading days dating back to June 23rd, the dollar index has closed positive on each day. Since June 23rd, the dollar index has moved up to the 92.41 handle, up from 91.73 or +0.75%.
  • The dollar index continues to edge higher as traders and investors await Friday's unemployment and Non-Farm Payrolls data to comes out.
  • The U.S. unemployment rate dropped to 5.8% in May 2021 from 6.1% in April. Moreover, June forecasts for an unemployment rate of 5.7%. See below a chart of the unemployment figures, and the steady decline investors are witnessing.

The above chart is per tradingeconomics.com

  • As for Non-Farm Payrolls data, the U.S. economy added 559K jobs in May of 2021, above an upwardly revised 278K in April but lower than forecasts of 650K. As for June, the market consensus is that the U.S. will add 700K jobs. Below is a chart of past Non-Farm Payrolls data.

The above chart is per tradingeconomics.com

  • The combination of Friday's unemployment report, Non-Farm Payrolls data, month-end, and quarter-ending rebalancing from institutions and buy-side players all combine for a perfect storm that can have significant implications for the U.S. dollar index.
  • In other currency-related news, the dollar has been rising against most of the global currencies. The USD has gained a sizable piece of ground against the Australian dollar, which has been affected by the COVID-19 Delta variant. The AUD/USD pair is -1.16% since the beginning of the week, Monday, June 28th.
  • For investors that are watching the currency market closely, they may look to analyze the following ETFs ahead of the big data releases.
  • USD Currency ETFs: Invesco DB U.S. Dollar Index Bullish Fund (NYSEARCA:UUP), WisdomTree Bloomberg U.S. Dollar Bullish Fund (NYSEARCA:USDU), and Invesco DB U.S. Dollar Index Bearish Fund (NYSEARCA:UDN).
  • AUD Currency ETF: Invesco CurrencyShares Australian Dollar Trust ETF (NYSEARCA:FXA).
  • EUR Currency ETF: Invesco CurrencyShares Euro Trust ETF (NYSEARCA:FXE).
  • GBP Currency ETF: Invesco CurrencyShares British Pound Sterling Trust ETF (NYSEARCA:FXB).
  • In other financial news, Russell Investments views inflation as "transitory," as stated in their 2021 Q3 global outlook report. Learn more.

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