US Dollar Index opens higher above 101.40, downside remains favored on lower US NFP forecast

• The DXY hit a fresh monthly low at 10.30 on positive market sentiment.
• A lower forecast of the US NFP is trimming the odds of an extremely hawkish stance by the Fed.
• The US economy may have added lower jobs in May than the prior print of 428k.

The US dollar index (DXY) is recording a pullback in its opening trade after hitting a monthly low of 101.30 on Monday. An impoverished performance has been displayed by the DXY for the last two weeks after a rebound in the risk-on impulse. Global equities and risk-sensitive currencies are enjoying liquidity while the DXY has been dumped by the market participants. The DXY is attempting to sustain above 101.40 in the Tokyo session.

US NFP Forecasts

Investors are entirely focusing on the US Nonfarm Payrolls (NFP) this week as it is considered a major catalyst by Federal Reserve (Fed) policymakers while drafting the monetary policy statement. As per the market consensus, investors should brace for lower US NFP at 320k against the prior print of 428k. It is worth noting that the US economy has added jobs in the labor force on an average of 551.6k after scrutinizing the records of the past 12 months. This indicates that the additional jobs curve is increasing but at a diminishing rate, which may call for a less hawkish commentary on the interest rate decision.

Key events this week: Consumer Confidence, ISM Manufacturing PMI, ADP Employment Change, Initial Jobless Claims, Nonfarm Productivity, Nonfarm Payrolls (NFP), Unemployment Rate, and ISM Services PMI.

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