Alpesh Patel
InvestingBetter.com
General market theme
Limited volatility in the global money markets over the past 24 hours as investors and traders are keeping quiet ahead of the today’s NFP report. Earlier in the week Fed comments drove the Dollar significantly lower across the board and set the tone for the rest of the quarter as everyone now expects the Fed to keep interest rate policy stable for now.
Today’s Non-Farm Payroll report will be an important clue to finding out how the US domestic economy is fairing but keeping in mind the surprise to the upside during the last month we should expect a correction lower in the number of jobs added. Such a development should not be good for the Dollar and if we have an even lower than expected figure then we might see fresh losses against its peers from the US currency.
Price action highlights
Yesterday the major currencies we monitor in our report remained pretty much unchanged as traders were cautious after Wednesday’s rally and ahead of today’s important employment report from the US. The Euro traded slightly lower but remained close to the 1.12000 area it had reached earlier this week and depending on how the NFP figures will print the Single currency might be eyeing the 1.1300 level today possibly on the back of surprise reading lower than expected.
The Cable was a bit more volatile as the release of the Inflation Report from the BoE pushed the currency lower but only for a couple of hours. The Pound lost the 1.4600 level but remained trading close by as traders were expecting a bearish guidance from the BoE and are mostly focused on how the Dollar will trade moving forward. Today a negative reading in the NFPs could drive the Cable to fresh highs and the 1.4700+ area could be the next stop.
Focus of the day
It goes without saying that the most important event of the day is the release of the Non-Farm Payrolls report from the US as everyone is anxious to see how it will affect the US Dollar. The risk here is to the downside as a positive reading will be treated with skepticism from market participants given the recent bearish tone from the Fed. However a surprise to the downside will harm the Dollar’s outlook even more and traders will continue unwinding their long trades. Apart from the number of jobs added the focus will be on the wage growth component.
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