GBP/USD steadies ahead of US employment data and despite volatility in stocks

British Pound

Risk took a bit of a hammering early on yesterday morning as news that the CFO of Huawei had been arrested in Canada was slowly digested by investors. Global stocks suffered and the greenback remained generally well bid throughout. However, moves in GBP/USD were mostly muted as traders look ahead to US Non-Farm Payrolls due for release today, as well as the crucial parliamentary vote early next week. That said, we did see a brief rally in the pound late last night after a story surfaced about a second referendum, should May’s deal not get voted through. Alas, the move wasn’t sustained and GBP/USD has slipped back through the Asian session.

As mentioned already, today’s focus will be squarely on the US employment report, unless there are any Brexit related surprises along the way.

United States Dollar

Expected Range: 1.2680 – 1.2850

US Treasury yields followed equities lower on Thursday amid expectations the FOMC will scale back the pace of rate hikes throughout 2019. Ten year treasury yields touched three month lows as parts of the US yield curve turned negative, suggesting the long run up cycle and sustained period of over-performance is coming to an end.

While the Fed is still widely expected to raise rates when it meets later this month, Fed futures imply that just one rate hike is forecast for 2019, suggesting the Fed is concerned about the pace of future US economic growth.

With risk still heavily important in driving direction attentions today turn to critical US wage growth and employment data for direction.

Euro

Expected Range: 1.1150 – 1.1280

The euro strengthened against the US dollar yesterday, on the back of some soft US data releases, but generally the range in EUR/USD has been steady. Respective German and French industrial production data printed weaker and stronger than expected this morning, and so hasn’t had too much of an impact on the currency. EUR/USD opens this morning at 1.1380.

Australian Dollar

Expected Range: 1.7550 – 1.7720

The Australian dollar’s multi-day decline extended through yesterday due to dovish comments from RBA deputy governor Debelle, coupled with softness in commodity and European equity markets. With markets adopting a risk-off modd, the aussie dipped below the key 0.72 handle, touching intraday lows of 0.7192 before being bid back up to 0.7225. The Australian dollar’s multi-day decline extended through yesterday due to dovish comments from RBA deputy governor Debelle, coupled with softness in commodity and European equity markets. With markets adopting a risk-off modd, the aussie dipped below the key 0.72 handle, touching intraday lows of 0.7192 before being bid back up to 0.7225.

It has recovered since, however, and opens in London at .7230, this as risk demand recovers and equity markets bounce off of their weekly lows.

AUD/USD traders will now look to Non-Farm payrolls from the States - markets are expecting a rise of 198K after last month’s blockbuster beat. Traders will also be conscious of upcoming Chinese economic data, due for release over the weekend.

Canadian Dollar

Expected Range: 1.7000 – 1.7180

The CAD fell further yesterday as risk was sold and commodities were sold off, including oil which threatened a break back below the $50 mark. It’s also suffering following the switch in gears from the Bank of Canada, who appear to be a little more dovish and more willing to keep rates on hold for longer yet. If anything, the central bank seem to be unwittingly stoking volatility in the CAD.

USD/CAD traders will now look to both US and Canadian employment data, due for release at 1:30 GMT, so look out for some volatility in the pair around this time.

New Zealand Dollar

Expected Range: 1.8400 – 1.8650

NZD/USD dropped close to .6850 on Thursday as most commodity currencies suffered. It’s recovered slightly since but has traded a flat range since amid a lack of any local data releases from either NZ or Australia. Focus now turns to the US employment numbers.
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