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08 Feb 2015
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Dollar strengthens after solid US jobs report

United States Dollar: The main market event on Friday was US Non-Farm Payrolls. In advance of the release, GBP/USD made steady gains and traded to a high of 1.5350 at around midday. It then gapped lower following the stronger than expected jobs data at 1:30. The report showed that 257,000 jobs were created in January vs. forecasts for 236,000. The prior two months were revised up to 423k and 329k too and wages for the month rose by 0.5% and so the dollar naturally moved higher. Cable fell to a low of 1.5216 and it’s made a mild recovery since to open this morning at 1.5265. Data like this US jobs data only serves to underline the divergence between expectations for the Fed’s monetary policy and that of other major central banks, which are either looking to cut rates or leave on hold for the rest of the year. It wouldn’t be a surprise for dollar bid momentum continue in to the early part of this week and to see GBP/USD test a break of 1.52 and 1.51. That said if UK manufacturing production data on Tuesday beats expectations the big figures may remain protected and there’s a sure chance of this happening given the positive PMIs released last week.

We expect a range today in the GBP/USD rate of 1.5200 to 1.5300

Euro: EUR/USD gapped from 1.1450 to 1.1350 following the US non-farm payrolls on Friday. The dollar continued to strengthen throughout the afternoon on Friday and the pair eventually bottomed out at 1.1288. It has recovered like GBP/USD in Asia to open in Europe at 1.1350. German industrial production and French trade balance both printed weaker than expected earlier in the morning on Friday which didn’t do much to support the single currency either. The euro has also weakened vs. the pound and GBP/EUR traded to a high of 1.3478 early this morning.

We expect a range today in the GBP/EUR rate of 1.3400 to 1.3475

Aussie and Kiwi Dollars: Both AUD/USD and NZD/USD were knocked lower on Friday following the US jobs data. AUD/USD remains on the back foot this morning too as Australian politics dominated the headlines over the weekend. PM Tony Abbot survived an attempt to depose him but it’s a huge dent to have it confirmed there is such a big lack of confidence in his leadership. AUD/USD opens this morning at .7790 having fallen to a low of .7745 in Sydney. NZD/USD dropped to .7328 post jobs data but has recovered since markets opened in Wellington to trade at .7395 this morning.

We expect a range today in the GBP/AUD rate of 1.9500 to 1.9640

We expect a range today in the GBP/NZD rate of 2.0520 to 2.0700

Data Releases

AUD: NAB Business Confidence, HPI q/q

EUR: Sentix Investor Confidence

GBP: No data

NZD: No data

USD: Labour Market Conditions Index m/m

If you want instant updates on movements in the FX market and fast access to the UKForex daily commentary, follow us on twitter at http://twitter.com/ukforex or @ukforex

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08 Feb 2015
Share

Dollar strengthens after solid US jobs report

United States Dollar: The main market event on Friday was US Non-Farm Payrolls. In advance of the release, GBP/USD made steady gains and traded to a high of 1.5350 at around midday. It then gapped lower following the stronger than expected jobs data at 1:30. The report showed that 257,000 jobs were created in January vs. forecasts for 236,000. The prior two months were revised up to 423k and 329k too and wages for the month rose by 0.5% and so the dollar naturally moved higher. Cable fell to a low of 1.5216 and it’s made a mild recovery since to open this morning at 1.5265. Data like this US jobs data only serves to underline the divergence between expectations for the Fed’s monetary policy and that of other major central banks, which are either looking to cut rates or leave on hold for the rest of the year. It wouldn’t be a surprise for dollar bid momentum continue in to the early part of this week and to see GBP/USD test a break of 1.52 and 1.51. That said if UK manufacturing production data on Tuesday beats expectations the big figures may remain protected and there’s a sure chance of this happening given the positive PMIs released last week.

We expect a range today in the GBP/USD rate of 1.5200 to 1.5300

Euro: EUR/USD gapped from 1.1450 to 1.1350 following the US non-farm payrolls on Friday. The dollar continued to strengthen throughout the afternoon on Friday and the pair eventually bottomed out at 1.1288. It has recovered like GBP/USD in Asia to open in Europe at 1.1350. German industrial production and French trade balance both printed weaker than expected earlier in the morning on Friday which didn’t do much to support the single currency either. The euro has also weakened vs. the pound and GBP/EUR traded to a high of 1.3478 early this morning.

We expect a range today in the GBP/EUR rate of 1.3400 to 1.3475

Aussie and Kiwi Dollars: Both AUD/USD and NZD/USD were knocked lower on Friday following the US jobs data. AUD/USD remains on the back foot this morning too as Australian politics dominated the headlines over the weekend. PM Tony Abbot survived an attempt to depose him but it’s a huge dent to have it confirmed there is such a big lack of confidence in his leadership. AUD/USD opens this morning at .7790 having fallen to a low of .7745 in Sydney. NZD/USD dropped to .7328 post jobs data but has recovered since markets opened in Wellington to trade at .7395 this morning.

We expect a range today in the GBP/AUD rate of 1.9500 to 1.9640

We expect a range today in the GBP/NZD rate of 2.0520 to 2.0700

Data Releases

AUD: NAB Business Confidence, HPI q/q

EUR: Sentix Investor Confidence

GBP: No data

NZD: No data

USD: Labour Market Conditions Index m/m

If you want instant updates on movements in the FX market and fast access to the UKForex daily commentary, follow us on twitter at http://twitter.com/ukforex or @ukforex

Learn more about