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President Trump and Fed Governor Powell dominated headlines and the dollar’s price action last week. Will economic reports become the biggest movers this week?

NFP week reports

Can’t have NFP week without NFP-related data! Over the next few days we’ll see hints about Uncle Sam’s labor market from lower-tier releases like the ISM non-manufacturing PMI today and ADP report on Thursday.

Still, nothing beats the much-awaited NFP report, which is scheduled on Friday at 1:30 pm GMT and is expected to print a 204K net increase after showing already adding 200K in January.

Meanwhile, the unemployment rate is expected to dial down from 4.1% to 4.0% while hourly earnings is expected to stay put at a rate of 0.3%.

Since Powell has hinted that he and his team would like to see labor market developments before they proceed with further rate hikes, you can bet your Bitcoins that other market players will be watching the release, too!

Dollar sentiment

Unless you’ve been too busy watching Oscar-nominated films, you should know that Trump wants to heavily tax steel and aluminum imports and that equity (and dollar) bulls don’t care much for it.

The final announcements are expected to be announced some time this week. If Trump takes an unbending stance and refrains from making exemptions, then he runs the risk of incurring similarly stiff trade policies from trade partners like the Euro Zone, Canada, and China and the dollar might go back to its downtrend.

But if Trump adopts a more moderate approach AND if leading indicators of the NFP report print favorable numbers, then we could see the dollar recover some of its losses this year.

Last Week’s Price Review

The Greenback is currently on track for another broad-based win after seizing third place from the Swissy (as of 6:00 pm GMT).

Overlay of USD Pairs: 1-Hour Forex Chart
Overlay of USD Pairs: 1-Hour Forex Chart

And looking at the overlay of USD pairs above, we can see that the Greenback steamrolled its peers for most of the week.

The yen eventually began to overpower the Greenback on Wednesday while the other currencies only recovered some of their losses against the Greenback on Thursday and the first half of Friday. After that, the Greenback had a more mixed performance.

So, what stoked demand for the Greenback on Monday? Well, there weren’t really any direct catalysts. In fact, new home sales data disappointed on Monday. However, some market analysts said that traders were likely positioning ahead of New Fed Head Powell’s speech on Tuesday.

Speaking of Powell, the new Fed Chair’s 3-hour marathon of a testimony was hawkish overall, especially the part where Powell implied that he and his fellow FOMC members may upgrade their projections for the Fed Funds rate to show the possibility of more than three hikes this year.

There were no fresh positive catalysts on Wednesday and the second estimate of U.S. Q4 GDP growth even revealed a disappointing downgrade from +2.6% quarter-on-quarter annualized to +2.5%.

Even so, the Greenback powered higher against everything except the yen. And market analysts quite naturally attributed the Greenback’s strength on Fed Chair Powell’s hawkish testimony.

The Greenback was finally forced to returns some of its gains during Thursday’s U.S. session, apparently as a reaction to Trump’s announcement that he plans to slap tariffs on aluminum and steel.

Although it’s also possible that the Greenback’s weakness may have been sustained by bulls taking some profits off the table after Fed Chair Powell tried to temper expectations during his second testimony.

The Greenback’s slide on Thursday and early Friday were not enough to completely negate the Greenback’s earlier gains, though, so the Greenback is still a net winner for the week.

Anyhow, we’ve got another NFP report next week. And since Fed Head Powell said that he wanted to see further improvements in the labor market, especially with regard to wage growth, it’s quite obvious what most traders will have their eyes on next week.