Dollar at fresh record highs ahead of NFP

Dollar gains on Friday morning, while euro is heading for its worst week against the dollar in nine months as investors await US non-farm payroll. Economic growth expectations in Europe remain dampened by Russia's invasion of Ukraine and the increased commodity prices that have resulted.

Bond market continues to go up

US Treasuries rose, with the benchmark yield falling below 1.80%. The difference between two-year and 10-year yields is at its smallest level since March 2020, indicating slower economic growth.

DXY at 21-month record highs

Intensifying tensions in eastern Europe has dragged all European currencies down, providing more room for the rising dollar. The US dollar index rally continues as the index reached 98 in the Asian trading session on Friday. The dollar found support from the solid labour market as US jobless claims dropped to their lowest level this year last week, and layoffs declined sharply in February, signalling a surge in growth in the labour market. 

Commodities prices keep hot

European natgas prices reversed early gains and were down about 7.5% after gaining more than 65% over the past two sessions. All industrial metals, including iron ore, copper, zinc, and aluminium, are extending their rallies. This week's gain in wheat prices has reached 25% so far, with a 4.5% gain in the last session. 

As a result, we see a rally in commodity-linked currencies like AUD and NZD. AUD/USD buyers conquer the 200-day EMA by forming a double-bottom pattern, keeping hope for breaking the descending trendline and reaching 0.74.

Kiwi bulls are also set to keep the rally intact against the US dollar on Friday. Buyers are attempting to hold the ground above the 100-day EMA, aiming for 0.868 near the 200-day EMA.

The NFP is in focus

After the ADP report surprised upside, markets are waiting for the NFP report which is expected to increase, and for the Unemployment Rate to decline to 3.9%.

With the greater-than-expected job growth, it appears that the labour market is recovering strongly from the omicron variant's spread in January, which led to many business closures and kept many workers home. A reduction in COVID-19 cases has been observed across the country, and restrictions on employment are being eased, which could encourage wary Americans to return to work.

Friday's monthly employment report from the Labour Department is expected to show that private payrolls increased by 383,000 in February.