05.08.202111:32 Forex Analysis & Reviews: The dollar rose, but Friday may bring unexpected surprises

Extremely negative data on employment in America from ADP, which were presented on Wednesday, again showed that the way chosen by the Biden Administration to solve economic problems burdened by the coronavirus pandemic does not give a fully positive result.

According to published data from ADP, the US economy received only 330,000 new jobs in the non-agricultural sector in July, against the forecast of growth of 695,000. It should also be noted that the previous June figures were revised downwards from 692,000 to 680,000. It should be noted that investors completely ignored the strong data of the business activity index in the manufacturing and non-manufacturing sectors, as well as in the services sector. It also seemed like they did not notice the positive figures of the purchasing managers' index for the non-manufacturing sector.

Earlier, we have repeatedly pointed out why the situation on the labor market is so worrying for market participants. It should be noted that this is a big problem, which can lead to negative trends in the national economy in the future, with all the ensuing consequences for financial markets.

The market clearly reacted to this depressing news with sales on the local stock market. First of all, the shares of companies that depend on economic growth were under noticeable pressure. Naturally, as we expected, weak values led to a sharp increase in demand for the dollar as a safe haven currency. The ICE dollar index jumped sharply, bouncing off the level of 92.00 points.

Will the dollar continue to grow further or not?

Despite the weak employment data from ADP, they are still not official, so bidders will look forward to the release of values from the US Department of Labor. And here, we can expect serious movements in the financial markets, and first of all in the foreign exchange market.

It is likely that before Friday, the markets will consolidate with a slight decline to strong support levels. The dollar may receive support, but it is likely to be limited, as market participants will want to see the official employment figures before taking any actions. It is possible that today we will see a partial pullback up against the background of profit-taking. However, it is necessary to exercise a high degree of caution, because there may be unexpected surprises for investors on Friday.

Forecast of the day:

The EUR/USD pair may receive support against the background of a recovery in demand for risky assets after yesterday's sell-off. If it stays above the 1.1830 mark, it will test the 1.1900 level again.

The XAU/USD pair remains in a wide range of 1793.00-1833.00. If the demand for risky assets returns to the market today, and there is such a probability, we should expect a local growth of the pair by 1831.00. From a technical point of view, it needs to stay above the 1807.00 mark.