Dollar Weakness Resumes

The dollar weakened further yesterday and remains in focus today with the December jobs report out this afternoon.

Previous Day's Market Highlights

Sterling briefly gained around an above-forecast Services PMI print, but the release’s overall market impact was limited. GBP/EUR softened further towards 1.12. A weaker dollar reversed Wednesday’s gains as EUR/USD inched to a new high since September and GBP/USD continued to hold above 1.35 but failed to reclaim 1.36.
 
ADP Employment Change surprised to the upside at 250K versus 190K expected. Weekly Initial Jobless Claims were higher than expected at 250K but still below the 300K consistent with a strengthening labour market.
 
The Dow Jones Industrial Average surpassed 25,000 for the first time as equities continued to rally on positive macro data.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1236 1.1509 1.1223 2.49%
GBP / USD 1.3548 1.3613 1.3304 2.27%
EUR / USD 1.2057 1.2089 1.1717 3.08%
GBP/AUD 1.7282 1.7999 1.7219 4.33%
GBP / NZD 1.8941 1.9776 1.8921 4.32%
GBP / CAD 1.6944 1.7385 1.6868 2.97%

Today's Market Highlights

A gain in core Eurozone inflation (10:00 GMT) back above 1.0% for the first time since September could strengthen the euro. However, gains may be limited if the headline figure slips as projected and as CPI continues to hold below the ECB’s 2.0% target rate. Under-target inflation and the euro’s strength will likely keep an ECB rate hike a distant prospect for the time being.    
 
Following yesterday’s US releases, the December jobs report will be in focus today (13:30 GMT), with particular attention paid to the NonFarm Payrolls and Hourly Earningsfigures. Expectations for the NonFarm figure will likely be higher after yesterday’s above-forecast ADP print, therefore risking investor disappointment should the release come in as forecast.
 
Canada releases trade and employment data (13:30 GMT). A tick up in the Unemployment Rate and smaller Net Change in Employment could weigh on the loonie.

Today's Economic Calendar

Time Currency Release Consensus Previous
10:00 EUR Preliminary CPI YoY (Dec) 1.0% 0.9%
10:00 EUR Preliminary Core CPI YoY (Dec) 1.4% 1.5%
13:30 USD NonFarm Payrolls (Dec) 190K 228K
13:30 USD Average Hourly Earnings MoM (Dec) 0.3% 0.2%
13:30 USD Average Hourly Earnings YoY (Dec) 2.5% 2.5%
13:30 USD Unemployment Rate (Dec) 4.1% 4.1%
13:30 USD Trade Balance (Nov) $-49.5B $-48.7B
13:30 CAD Trade Balance (Nov) $-1.20B $-1.47B
13:30 CAD Unemployment Rate (Dec) 6.0% 5.9%
13:30 CAD Net Change in Employment (Dec) 1.0K 79.5K
15:00 USD ISM Non-Manufacturing PMI (Dec) 57.6 57.4
15:00 CAD Ivey Purchasing Managers Index s.a. (Dec) 62.2 63.0
15:15 USD Fed's Harker Speaks
17:30 USD Fed's Mester Speaks