Thursday’s trade saw USD to PKR within the range 154.30-154.58. The pair closed flat at 154.30, after an unexpected announcement by China concerning tariffs on US imports seemed to have quelled pessimism about macroeconomic effects of the Wuhan-originated coronavirus.
China said that additional tariffs, imposed on 1 717 US goods in September 2019, would be halved, after the “Phase One” trade deal between the two countries has already been signed. The cuts are to come into effect at 05:01 GMT on February 14th. Beijing’s announcement is also considered by analysts as a move aimed at improving business confidence as the coronavirus outbreak has had an impact on a number of businesses and has also weighed on market sentiment.
Meanwhile, the US Labor Department’s weekly report on jobless claims added to the recent string of upbeat data, with the number of Americans filing for unemployment benefits decreasing to 202 000 during the business week ended January 31st from 217 000 in the prior week. It has been the lowest number of claims since the business week ended April 12th 2019.
The spread between 3-year Pakistani and 3-year US bond yields, which reflects the flow of funds in a short term, narrowed to 10.814% (1081.4 basis points) on February 6th from 11.061% (1106.1 basis points) on February 5th.
The US Dollar Index was 0.01% weaker to 98.47 in late Asian trade on Friday, but remained in proximity to yesterday’s 16-week high of 98.57.
Today’s market focus will be on the more comprehensive non-farm payrolls report, which reflects employment in US public and private sectors. Employers in all segments of US economy, excluding the farming industry, probably added 165 000 new jobs in January, according to market expectations, after a job gain of 145 000 in December. Higher-than-expected job growth in January would have a considerable bullish effect on the USD, because of positive implications regarding labor market strength and consumer spending respectively.
Meanwhile, the rate of unemployment in the country probably remained stable at 3.5% or the lowest level since 1969, in January, according to estimates. The official government report is due out at 13:30 GMT.
USD/PKR was up 0.03% at 154.35 in late Asian session on Friday.