Holding firm ahead of Non-Farms
Quote of the day: “It’s how you set the sails, not the wind direction, that controls which way you go!”
May 6th: Highlights
- Sterling steady on the open
- Euro vulnerable to counterparty movement
- Dollar firm as positions taken ahead of Non-Farm data
With no domestic data on the calendar today, Sterling is likely to range trade against most major pairs. Remaining open to downside risk, the US Non-Farm Payrolls could drive a reaction.
The Euro eased against the Dollar yesterday while staying fairly flat against most other currency pairs. Continuing uncertainty over the EU recovery continues to weigh on sentiment. Data from the Services and Manufacturing sectors from France and Germany remained subdued, which concerns any analysts expecting the recovery to be driven by these member states. The ECB is likely to keep a bearish outlook for the Euro.
The dollar posted gains against JPY and EUR, driven largely by position taking ahead of today’s Non Farm Payroll data. The market is expecting a weaker number but the recent positive job numbers have not led to any rise in consumption and expenditure. As such, there is a greater down-side risk from a poor data set today because the US needs more than good employment data to push the economy forward. The market expectations have shifted and currently only a 10% chance of a June rate hike is being priced in and only a 50% chance of a rate hike at the end of the year. With this shift underpinning the current opinions, if the jobs data is very weak we could see a rather volatile afternoon.
Have a great day!
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