Currency markets await US Jobs Report

The US's August jobs report is the main event today. Markets will also keep an eye on the latest trade headlines.

Previous Day's Market Highlights

Exchange rates were little changed yesterday. Cable held in the 1.29-1.30 band and sterling-euro continued to trade above 1.11. Euro-dollar remained above 1.16. The pound climbed against the Canadian dollar to regain 1.71.
 
The US dollar reaction to a slightly sub-forecast ADP Employment Change release was relatively limited. Weekly Initial Jobless Claims and the ISM Non-Manufacturing PMI both beat forecasts. 
 
The Canadian dollar gained after a speech from BoC Deputy Governor Wilkins, in which she said that the BoC considered dropping the “gradual approach” to raising interest rates and was relatively upbeat on the economic growth outlook. The loonie later saw additional gains after Trump said that he thinks Canada will be part of a new NAFTA deal. This saw sterling-loonie dip back below 1.70.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1114 1.1241 1.0991 2.22%
GBP/USD 1.2937 1.3044 1.2666 2.90%
EUR/USD 1.1640 1.1734 1.1301 3.69%
GBP/AUD 1.8093 1.8110 1.7399 3.93%
GBP/NZD 1.9673 1.9756 1.9167 2.98%
GBP/CAD 1.7000 1.7108 1.6596 2.99%

Today's Market Highlights

Today’s releases kick off with the final estimate of the Eurozone’s Q2 GDP (10:00 BST). Growth is projected to be unrevised at 0.4% quarter-on-quarter and 2.2% year-on-year. Overall, then, the release may have a muted impact on the euro unless there are any surprises.
 
In the afternoon, attention will largely be on the US’s August jobs report (13:30). Signs of strength in both the number of jobs added to the economy and wage growth would see the dollar strengthen. With the labour market tightening, wage growth has been in particularly as markets watch for signals that earning are picking up. If either figure disappoints, the dollar could instead weaken.
 
Canada will also be releasing employment data, and the loonie could come under pressure on a projected increase in the Unemployment rate. NAFTA headlines will remain key.
 
Looking ahead to next week, highlights include UK employment data and meetings of both the Bank of England and the European Central Bank.

Today's Economic Calendar

Time Currency Release Consensus Previous
10:00am EUR GDP s.a. QoQ (Q2) 0.4% 0.4%
10:00am EUR GDP s.a. YoY (Q2) 2.2% 2.2%
1:30pm USD Nonfarm Payrolls (Aug) 191K 157K
1:30pm USD Average Hourly Earnings MoM (Aug) 0.2% 0.3%
1:30pm USD Average Hourly Earnings YoY (Aug) 2.7% 2.7%
1:30pm USD Unemployment Rate (Aug) 3.8% 3.9%
1:30pm USD Fed's Rosengren Speaks
1:30pm CAD Unemployment Rate (Aug) 5.9% 5.8%
1:30pm CAD Net Change in Employment (Aug) 5.0K 54.1K
2:00pm USD Fed's Mester Speaks
3:00pm CAD Ivey Purchasing Managers' Index s.a. (Aug) 61.4 61.8
5:45pm USD Fed's Kaplan Speaks

Caxton