Cable Stuck in Reverse

GBP/USD fell for the eighth consecutive session on Thursday to match the longest losing streak in six years. The New Zealand dollar was the best performer while the euro lagged on dovish signals from Draghi. Asian-Pacific trading features data on Japanese wage inflation. A new Premium note has been issued in the aftermath of the ECB-driven selloff and ahead of Friday's NFP.

Cable is in the midst of the longest decline since April 2008. At just under 500 pips, it's by no means the most dramatic fall but the uninterrupted duration of the decline bears a closer look.What stands out is that very little has changed in the UK outlook. Notable economic data in that period included a better GfK consumer confidence report and solid Q2 GDP.

A trifecta of disappointing UK PMIs (construction, manufacturing and services) further pushed away BoE hike expectations.

Another reason is related to PM David Cameron's compromise over the referendum question on Britain's EU membership. The question would no longer ask whether Brits wanted to remain or exit the EU, which would have a "yes" or "no" answer, but become two questions; asking whether people wanted to leave or remain. The "No" camp believes the new approach carries less negative connotations associated with leaving the EU.

Also weighing on the pound was a survey for Scottish broadcaster STV by Ipsos Mori showing most Scots would back independence from the UK if there were another referendum today.

The pound remains a desirable currency in a country that's outgrowing its peers. A dip like this beckons for opportunism and the June lows near 1.52 present a support level worth watching.

But the main event most were watching today was the ECB. Ashraf stressed how Draghi used it to cap the euro. For the remainder of the year, ECB meetings will be 'live' in the sense that Draghi could signal more QE or other measures at any time.

Another standout from the ECB was how Fed funds futures fell to a 30% of a hike from 38% beforehand. That was despite ISM non-manufacturing beating estimates at 59.0 vs 58.2 expected. The lowered Eurozone growth forecasts are something the Fed will note but Draghi's broader concern about emerging markets is probably a larger factor.

Up next is the July Japanese report on labor cash earnings at 0130 GMT. It's expected to show a +2.0% y/y gain after a 2.4% drop in the previous month. Signs of wage inflation would curb the chance of BOJ easing and increase our confidence in the USD/JPY top.

More important in the near-term is Friday's non-farm payrolls report. The market has grown complacent about jobs with estimates tightly bunched around 200K. Ashraf notes that August is historically one of the best bets for a disappointing report. The best trade on a miss would be selling USD/JPY, at least on the kneejerk.