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US Dollar Selloff Unfazed by NFP Data with Focus on Election

US Dollar Selloff Unfazed by NFP Data with Focus on Election

2020-11-06 13:45:00
Rich Dvorak, Analyst
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USD PRICE OUTLOOK: US DOLLAR STRUGGLES TO STABILIZE ON NONFARM PAYROLLS BEAT

  • US Dollar remains under pressure after failing to catch a bid in response to solid NFP data
  • Nonfarm payrolls topped market forecast with 638K job gains, unemployment rate at 6.9%
  • USD price action has faced considerable headwinds on the prospect of a Biden Presidency
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The US Dollar is trading notably on its back foot with the broad-based DXY Index down about 0.3% intraday. USD selling pressure appears to largely follow the growing prospect of Joe Biden becoming victorious with his presidential bid. US Dollar bears drove the Greenback sharply lower early Friday morning following news that votes for Biden in Georgia - a key battleground state - have surpassed those for incumbent President Trump. This has potential to confirm a Biden presidency as he sits within arms-reach of 270 electoral college votes needed to clinch the election.

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US DOLLAR INDEX PRICE CHART: 5-MINUTE TIME FRAME (06 NOV 2020 INTRADAY)

US Dollar Index Chart USD Price Outlook

Chart by @RichDvorakFX created using TradingView

This looks to be a dominating driver of US Dollar weakness with better-than-expected nonfarm payrolls data unable to stymie the selloff. According to the DailyFX Economic Calendar, nonfarm payrolls data topped market forecast of 600K with actual figures crossing the wires at 638K job gains for the month of October. The unemployment rate also improved considerably after falling from 7.9% to 6.9%.

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This prompted an initial bounce in the US Dollar Index, but the move was short-lived owing to more dominant selling pressure. That said, until President Trump concedes, there is potential for another flareup in market volatility and risk aversion if he tries to further contest election results. This could threaten to send the US Dollar snapping back higher in turn.

-- Written by Rich Dvorak, Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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