Market Info

USD shrugs off Fridays disappointing Non-Farm Payrolls

09/10/2017 | OzForex

United States Dollar:

GBP/USD falls ground to a halt on Friday following a negative non-farm payroll print and better than expected UK House Price numbers. US Bureau of Labor Statistics stated that the number of employed people, excluding the farming industry, fell by 33,000 from the previous month, however, Analysts largely dismissed the news and mentioned it will take a few months fully clarify the impact of recent US hurricanes. Investors also focused on the overall fall in US unemployment rate, from 6.3% to 6.2% and the rise in average hourly earnings rate, from 0.3% to 0.5%. This meant the pair continued to trade a little lower directly following release, reaching an interbank low of just above 1.3030 but has since retraced around three-quarters of a cent as suggestions North Korea is preparing to test a long-range missile heightened concerns that some form of military intervention was imminent.

Looking ahead to this week docket, today is relatively clear with bank holidays in US, Canada and Japan; tomorrow is also quite light with only UK Manufacturing Producing due while Wednesday sees things start to ramp up with the FOMC minutes from their meeting 3 weeks ago. It’s unlikely anything further will be gleaned from these minutes as much will have been reported already or stated by FED member speeches. Instead, Thursday and Friday have the highest chance of volatility with US Unemployment claims and Retail sales due respectively plus the headline news of US Consumer Price Index.

We expect a range today in the GBP/USD1.3065 and 1.3165

Euro:

Political instability from both the UK and Europe was the main driver last week. In the UK the Tory party conference didn’t go to Theresa May’s plans. A bad cough, set trouble and a comedian interrupting her speech to hand her a fake P45, apparently from Boris Johnson, were used to highlight her deteriorating leadership. Since then MPs have rallied around the Prime Minister backing her comments she is providing calm leadership. Boris Johnson was one of these MPs providing support, however, this is unsurprising as speculation she might reshuffle the cabinet would see his name as top of the list to move to the backbenches.

While politics will continue to dominate this week, further volatility is likely following Tuesdays’ UK Industrial, Construction and Manufacturing PMI print plus a speech from ECB President Draghi who is due to participate in a panel discussion about Monetary Policy at the Peterson Institute for International Economics in Washington DC.

EUR/USD fell through 1.17 on Friday despite a disappointing non-farm payroll print. With little European data, markets were focussed on US numbers. The Greenback found support following stronger than expected wage growth data and jumped to touch two-month highs against the Euro. This capped the world reserve currency’s best weekly winning streak in nearly 12 months.

Attention now turns to the FOMC minutes on Wednesday, Eurozone Industrial Production and ECB President Draghi speech on Thursday. Friday will likely see the strongest volatility following US Consumer price index and Retail Sales numbers.

We expect a range today in the GBP/EUR rate of 1.1120 and 1.1220

Aussie and Kiwi Dollars:

GBP/AUD opens this morning back above the 1.69 interbank handle as support for AUD waivered. Building approvals slowed as well as the AIG manufacturing and services sectors. Retail Sales also reported a fall and with the RBA concerned over the outlook for household spending the future on a near interest rate rise has lowered.

Stronger than expected wage growth and a drop in unemployment rate in the United States saw the Kiwi close at 0.7090 US Cents. With an unexpected drop in GDT Dairy prices last week and continued uncertainty for the balance of power to form a coalition government, The Kiwi could remain under pressure over the coming week.

We expect a range today in the GBP/AUD rate of 1.6825 to 1.70

We expect a range today in the GBP/NZD rate of 1.8460 to 1.8640

Data Releases

AUD: NAB Business confidence and conditions (Sep)

EUR: No Data

GBP: BRC like-for-like Retail Sales

NZD: Electronic Card Retail Sales

USD: No Data

 

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