USD take a breather after weaker than expected US non-farm payrolls, dropping back towards the neckline support after a 4-day winning run. Ethereum, however, continues to rally, hitting new highs at $1764. GBP is the weakest of the day, after rallying across the board on Thursday as the BoE underscored the ongoing turn in central bank policy away from easing. Below is the chart showing USDX moving in tandem with real US yields against XAUUSD.
Remember Jobs Data?
Once again, US NFP diverged with largely positive survey jobs data as payrolls rose 49k, 3x less than consensus expectations, while the prev 2 mths were revised down by 159k. The unemployment rate fell to 6.3%.
BoE off the Table ...again
With upbeat forecasts and a unanimous vote, the Bank of England signaled that negative rates are othe ff the table. Instead, the focus will now be on how quickly Bailey begins the taper and how long it will be before rates rise.
The QE program was kept at 895B pounds with the current 4.4B/week pace maintained until St Patrick's Day. It's likely to be trimmed by around 1b/week from there, baring any kind of surprise.
The market was caught off-guard by the level of confidence in the central bank despite the latest lockdown measures. Sterling jumped and as the only currency to hold off the ongoing rally in the US dollar (see yesterday's note).
The BOE is another example of central banks signaling (though not explicitly) that the easing cycle is over. The pandemic has been highly uncertain but after the first wave, consumers, businesses and governments have been able to better muddle along. Though some places may see negative GDP in Q1, optimism about the post-vaccine economy is building.
As is tradition, the end of the easing cycle means a quick pivot in markets to a focus on when the hiking cycle will begin. Despite the Fed's insistence that it will let inflation run hot, the market is focused on the US, because growth has held up much better there. Rates are ticking higher and the US dollar gained for seven straight days against the yen.
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.