Narrow ranges prevailed on Thursday with US markets closed.
Narrow ranges prevailed on Thursday with US markets closed and caution ahead of Friday’s crucial US employment report with a slight dip in US yields.
German bond yields also declined to fresh record lows which curbed Euro support despite a narrowing of Italian/German yield spreads.
The dollar was unable to make headway on Thursday as market expectations of a Fed rate cut continued, but some short covering triggered slight gains on Friday.
Uncertainty over trade developments curbed potential fresh gains for commodity currencies with slight net losses.
Gold and oil also traded in narrow ranges with limited losses on Friday as the US dollar advanced slightly. Bitcoin retreated after again failing to break above the $12,000 level.
There were no US developments given the US market holiday with EUR/USD unable to regain 1.1300 and consolidating around 1.1280 ahead of the US data. Markets are expecting an increase in non-farm payrolls of around 160,000 following a 75,000 increase the previous month with unemployment static at 3.6%. Average hourly earnings expectations will also be important with consensus expectations of a 3.2% increase over the year.
Sterling continued to be hampered by concerns over the growth outlook following the weak PMI data releases the week. There was also further speculation that the Bank of England would adopt a more dovish policy stance over the next few months. In relative global terms, however, the central bank stance is likely to be slightly restrictive, especially with expectations that the Federal Reserve and ECB will cut interest rates during the third quarter. Sterling will also gain some support if there are increased hopes that global monetary policy actions support the global growth outlook.
GBP/EUR found support close to 1.1125 before fading to near 0.8960 while GBP/USD found support close to 1.2570 with tight ranges. Global factors and position adjustment are likely to dominate on Friday, although markets will also be monitoring the Conservative Party leadership election. GBP/USD was little changed around 1.2580 on Friday.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 07:00 | German Factory Orders (M/M)(MAY) | - | 0.30% |
| 07:00 | German Industrial Production (M/M)(MAY) | -0.40% | -1.90% |
| 08:30 | GBP Halifax HPI (M/M)(JUN) | -0.20% | 0.50% |
| 13:30 | USD Average Hourly Earnings (M/M)(JUN) | 0.30% | 0.20% |
| 13:30 | USD Average Hourly Earnings (Y/Y)(JUN) | - | 3.10% |
| 13:30 | USD Non-farm Payrolls(M/M)(JUN) | 185K | 75K |
| 13:30 | USD Private Nonfarm Payrolls (JUN) | - | 90K |
| 13:30 | USD Labor Force Participation Rate(JUN) | - | 62.80% |
| 13:30 | United States Unemployment Rate(M/M)(JUN) | 3.60% | 3.60% |
| 13:30 | CAD Employment Change (M/M)(JUN) | 8.0K | 27.7K |
| 13:30 | CAD Full Employment Change(JUN) | - | 27.7K |
| 13:30 | CAD Unemployment Rate (M/M)(JUN) | - | 5.40% |
| 15:00 | CAD Ivey PMI(M/M)(JUN) | - | 55.9 |
| 18:00 | USD Baker Hughes US Oil Count | - | 793 |