Brexit, US NonFarms in Focus

Market drivers today include monthly US jobs data and the latest Brexit headlines as May's cabinet heads to Chequers.

Previous Day's Market Highlights

Sterling rallied in the morning as BoE Governor Carney was relatively upbeat in comments, reiterating that Q1 softness was likely due to bad weather and saying that tighter monetary policy will be needed. This increased expectations for an August rate rise and kept the pound up at around one-week highs against the dollar.
 
However, sterling fell in the afternoon session on reports that Germany wouldn’t support Prime Minister May’s latest Brexit customs union proposals. As a result, sterling-euro dropped below 1.13 and sterling-dollar fell back towards 1.32. Sterling gave up earlier gains against the commodity currencies.
 
Euro-dollar broke above 1.17 for the first time since 26 June. The US’s ADP Employment Change reading was lower than forecast. Last night, the Fed meeting minutes revealed that while the Fed sees two more hikes as likely appropriate, there is rising concern over trade policy. The currency impact was muted.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1296 1.1471 1.1247 1.95%
GBP/USD 1.3241 1.3448 1.3049 2.97%
EUR/USD 1.1721 1.1853 1.1510 2.89%
GBP/AUD 1.7871 1.7981 1.7472 2.83%
GBP/NZD 1.9428 1.9622 1.8925 3.55%
GBP/CAD 1.7378 1.7791 1.7168 3.50%

Today's Market Highlights

The calendar picks up today after a reasonably quiet week. Prime Minister May’s cabinet heads to Chequers to assemble a Brexit white paper on the UK’s desired future relationship with the EU. Any headlines that come out of today’s event pose a downside risk to the pound.
 
In the afternoon, attention will be on the US’s June jobs report (13:30), which is typically a source of market volatility. Alongside the Unemployment Rate remaining at its lowest levels since 2000, a pick-up in NonFarm Payrolls and Average Hourly Earnings could see the dollar strength, while a mixed set of prints could instead weigh on the greenback.
 
Canada releases trade and labour market data (13:30). The picture may be mixed for the Canadian dollar with the trade deficit forecast to have widened and the Net Change in Employment to have increased.

Today's Economic Calendar

Time Currency Release Consensus Previous
1:30pm USD Unemployment Rate (Jun) 3.8% 3.8%
1:30pm USD Nonfarm Payrolls (Jun) 195K 223K
1:30pm USD Average Hourly Earnings MoM (Jun) 0.3% 0.3%
1:30pm USD Average Hourly Earnings YoY (Jun) 2.8% 2.7%
1:30pm USD Trade Balance (May) $-43.7B $-46.2B
1:30pm CAD International Merchandise Trade (May) $-2.05B $-1.90B
1:30pm CAD Unemployment Rate (Jun) 5.8% 5.8%
1:30pm CAD Net Change In Employment (Jun) 24.0K -7.5K
3:00pm CAD Ivey Purchasing Managers Index s.a. (Jun) 63.2 62.5

Caxton