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07 Dec 2014

Dollar gaps higher after strong jobs data

United States Dollar: The dollar jumped higher on Friday following the release of better than expected US jobs data. It showed that employers added 321,000 jobs in November vs. expectations for 231,000, the most since January 2012. GBP/USD gapped from 1.5695 to 1.5633 and then on to 1.5580. The dollar has continued to strengthen overnight and GBP/USD opens this morning at 1.5550 - it’s not looking likely to rally back any time soon either, especially so amid a lack of any top tier economic data today. Focus this week will be on UK manufacturing data. Later in the week, US retail sales data is due – if this comes in strong it will only serve to support momentum in dollar bids, especially so following the hot US jobs data last week.

We expect a range today in the GBP/USD rate of 1.5510 to 1.5710

Euro: Friday was all about US Non-Farm Payrolls. EUR/USD traded a steady range throughout the morning on Friday around 1.2350. Come the strong US jobs data it dropped off a cliff and fell to 1.2280. Like GBP/USD, EUR/USD has continued to drift lower in Asia and it opens this morning at 1.2250. Meanwhile, GBP/EUR it little changed from Friday’s opening level and opens this week in London at 1.2685. In other news over the weekend, Italy and France made it clear they were irked by comments from German Chancellor Merkel who said that the two countries needed to do more to bring their budgets in line with EU rules. It didn’t have too much of an impact on the euro. Details of the ECBs LTRO are released this week, or moreover details of how much the central bank will be lending to EU banks. The LTRO provides liquidity to the banks.

We expect a range today in the GBP/EUR rate of 1.2655 to 1.2735

Aussie and Kiwi Dollars: Both AUD/USD and NZD/USD have fallen over the last 24 hours, weighed down by the strong US jobs data. They open this morning at .8275 and .7625 respectively. Not a lot else has happened since markets opened late last night. The focus this week for markets ‘down under’ will be on the RBNZ monetary policy statement and a speech by Governor Wheeler. Australian employment data is also due on Thursday.

We expect a range today in the GBP/AUD rate of 1.8750 to 1.8880

We expect a range today in the GBP/NZD rate of 2.0340 to 2.0460

Data Releases

AUD: NAB Business Confidence

EUR: Sentix Investor Confidence, Eurogroup Meetings

GBP: BRC Retail Sales Monitor y/y

NZD: No data

USD: Labour Market Conditions Index m/m

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