Dollars ditched ahead of Nonfarm Payrolls Report
It was a mixed day yesterday for the Dollar – Markit’s Service PMI and Factory Orders came in short of expectations, while ISM Non-manufacturing has surpassed consensus for February. Following the US data, there was increased selling interest surrounding the Greenback. All eyes will be on the Non farm payrolls (NFP) and US unemployment figures released today, as investors will try to gauge the overall strength of the US economy. A strong jobs report would help the Dollar by adding to the case for a rate hike in June by the Fed.
Similarly to yesterday, the market opens this morning with GBPEUR at 1.2919. With a quiet data day ahead for the Eurozone price action is likely to be muted for the single currency against the Pound. EURUSD is likely to see action ahead of the US non-farm employment rates. Depending on how the Euro fairs, focus will be on how the European Central Bank (ECB) will react next Thursday. With the current disinflationary fears and the state of the Euro, pressure is on Draghi to announce aggressive policy changes for the Euro.
Sterling has dismissed the poor economic data this week as we saw it continue its upward trend against both the Dollar and the Euro. We saw lower than expected results in all segments including manufacturing, construction and services PMI. These have gone unnoticed as the markets have turned their attention to the US jobs data. The Pound was up 0.56% against the Dollar yesterday.This defiance from the UK currency against the Dollar hints at the possibility that investors are not in fact buying Pounds, but simply selling Dollars, which again casts doubts on the US currency’s outlook.The only data of note for the UK today will be consumer inflation expectations this morning.
Data to watch: 9.30am UK Consumer Inflation Expectations. 1.30pm US Unemployment Rate (Feb). US Non-farm payrolls (Feb). US Labour Force Participation Rate (Feb). US Average Hourly Earnings.