Bullish Powell curbs dollar losses, ahead of today’s US jobs report

The dollar took centre stage yesterday, and looks to non-farm data today.

Previous Day's Market Highlights

Yesterday it was the dollar taking centre stage, weakening against the majors after the benchmark 10-year Treasury yields fell below 2.85 percent, adding to the growing fears by many that a US economic slowdown is on the horizon. The greenback fell 0.4 percent against the euro and 0.5 percent against the pound throughout the trading day and failed to recover ground when a positive ISM non-manufacturing PMI was released, beating expectations, climbing to 60.7 vs 59.2 forecasted. It was then over to Fed chair Jerome Powell, speaking in the evening session. He delivered a bullish assessment of the US economy and stated the economy is performing very well with strong job creation and rising wages. This allowed the dollar to claw back 0.25 percent against the pound, with the potential for further gains when the markets open today.

Also, from across the pond, Canadian Trade Balance widened in October, with exports falling by 1.2 percent mainly due to lower exports of crude oil. This caused the loonie to fall to its lowest level in three weeks against the pound. Governor Poloz expects the economy will continue to feel the effects of the ongoing oil price-shock, however, estimates it will likely have less impact on the economy compared to the 2015 oil-price crisis.

Mrs May yesterday reiterated her stance on BBC Radio 4 yesterday morning, backing herself to win the vote on her Brexit deal in parliament on December 11th and dismissed speculation that next Tuesday’s Brexit vote could be delayed amid pressure from senior Ministers. Mrs May sketched out the idea of allowing MP’s to choose when and if they want to go into the controversial backstop, with an aim to get Parliament more involved to help steer the angry Brexiteers back onside. The pound bounced within a range of 1.1208 and 1.1252 against the euro, closing at 1.1238.

Oil prices slipped 4 percent to below $60(£47) yesterday as Opec delayed the expected announcement to cut output, after failing to agree terms in Vienna. The decision surrounding the scale of the production cut will continue Friday.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1216 1.1506 1.1188 2.76%
GBP/USD 1.2758 1.3071 1.2658 3.16%
EUR/USD 1.1370 1.1464 1.1275 1.65%
GBP/AUD 1.7676 1.8985 1.7210 3.14%
GBP/NZD 1.8547 1.8985 1.8290 3.66%
GBP/CAD 1.7082 1.7285 1.6721 3.26%

Today's Market Highlights

The focus today will once again be state side, with the US Non-Farm Payroll being the focus for investors, trying to further gauge the state of the US economy following the very positive tones from Fed chair Powell last night. The Non-Farm data is expected to increase by 200k In November, which is negative compared to last month’s 250k, however it would be aligned with the statements from Fed Chair Powell, in that the job market is still thriving, albeit slightly slower. US wage growth has been forecasted to improve 0.3 percent from the previous month, which should pathway for dollar advances. At the same time Canadian employment data will be released, with the unemployment rate forecasted to remain unchanged at 5.8% in November, its lowest level since February 2008 and new jobs created is expected to rise 10k.

In commodities today, OPEC is expected to reconvene its meeting in Vienna, with traders eagerly awaiting a decision on whether a cut to production will be announced. This would go against US President Trumps calls to keeping the oil flows unrestricted and undermine his mission to keep oil prices lower.

Today's Economic Calendar

Time Currency Release Consensus Previous
8:30am GBP Halifax HPI m/m 0.3% 0.7%
10:00am EUR GDP (Q3) q/q 0.2% 0.2%
1:30pm CAD Employment Change 10.3k 11.2k
1:30pm CAD Unemployment Rate 5.8% 5.8%
1:30pm USD Non - Farm Employment Change 200k 250k
1:30pm USD Average Hourly Earnings m/m 0.3% 0.2%
1:30pm USD Unemployment Rate 3.7% 3.7%
3:00pm USD Prelim Michigan Consumer Sentiment index 97.0 97.5
5:00pm USD FOMC Brainard Speaks