USD falls on mixed employment data

Today's Highlights

• USD falls on mixed employment data

• UK retail sales help the Pound

• Happy New Year to China

FX Market Overview

Well three very tight games got the 6 Nations off to a flying start. For all the criticism, England's win over Scotland was by the widest margin the weekend but that's not saying a lot. A draw in Dublin probably cost the bookies a few quid ....if anyone backed them. Speaking of which, apparently a few confident punters backed Leicester City to win the Football Premiership at 5,000 to 1 before the start of the season and they are now 5 points clear at the top and all because Richard III was reburied near their ground....or so they say.

The markets are still very much focused on the plight of China's slowing economy and the efforts by various central banks to try to keep some growth or, in some cases, start some growth in their economies. These central bankers are trying to do that and keep their currencies weak in order to help exporters and it is causing a bit of a kerfuffle.

Last week ended with the US Dollar dropping 3 cents against the Pound and 4 cents against the Euro after generally unsettling employment data. The Non-Farm Payroll count rose less than expected at 151,000 in January. That was well below the 190,000-200,000 figure most in the markets had forecast and the December figure was revised to a lower level as well. Nonetheless, the unemployment rate did improve to 4.9% and average wages and worked hours also improved but that didn't stop the USD weakening as traders try to assess just how long it will be before the Federal Reserve adds another rate hike. I suspect, with poorer than expected GDP data as well, it will be Q3 before that becomes a credible discussion.

Happy New Year to all our Chinese readers. The dawning of the Year of the Monkey also starts a week of public holiday for China and that will leave the markets without the influence of the most dominant factor for a few days.

Sterling started the week on the front foot after Visa reported that retail sales grew by 2.7% in January. That's the fastest growth since May 2014 on the same measure. We will get the BRC measure of that sector overnight tonight. The only other big news of the week for the Pound will be industrial and manufacturing data on Wednesday. Sterling, having bounced a little last week, will have few reasons to continue with that strength unless something hits us out of the blue. Other than this, the week ahead is a pretty typical 2nd week of the month; lots of tier two data but very few market moving items. However, we will get Eurozone GDP growth data and US retail sales data on Friday. These are your highlights.

In other news, in a story that sounds a bit like a cross between Game of Thrones and Robocop, the Metropolitan Police in London are contemplating training birds of prey to attack drones just in case they encounter naughty drones smuggling illicit substances and the like. A trial in Holland saw an eagle take out a drone in mid-air. I love the idea of this. It could be a sport.