Markets Consolidate after US Jobs Report

After the upbeat US Jobs Report on Friday, traders will be expecting a quiet market with a light economic calendar today. Political news from Italy and Spain may cause some Euro volatility, however the major pairings are likely to remain relatively rangebound barring any major surprises.

Previous Day's Market Highlights

Friday's Non-farm Payrolls report came out well above the expectation of 190k at 223k. The unemployment rate printed at 3.8%, and Average Hourly Earnings came in at 2.7% YOY, beating the expectation of 2.6%, setting up the Fed’s rate decision for a hike at the next FOMC meeting, taking place June 12-13.

The Australian Dollar followed China’s bourses downward. That added to the sense that markets were worried about the negative knock-on effects of a trade war on the supply chain running from the country’s commodity exporters and through Chinese factories to US markets.

The Canadian Dollar traded higher, retracing some of the prior session’s dramatic losses. The currency suffered the largest drop in over two months against an average of its major counterparts after disappointing GDP data undercut BOC rate hike bets. Indeed, it tellingly fell alongside local front-end bond yields.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1419 1.1478 1.1302 1.53%
GBP/USD 1.3372 1.3619 1.3204 3.05%
EUR/USD 1.1710 1.1996 1.1510 4.05%
GBP/AUD 1.7722 1.8241 1.7518 3.96%
GBP/NZD 1.9051 1.8927 1.9085 3.93%
GBP/CAD 1.7279 1.7567 1.7055 2.91%

Today's Market Highlights

A quiet morning for data sees only the UK Construction PMI as the notable release. This is forecast to show continued expansion with a print of 52.0, albeit at a slower pace than previous months. Sterling traders will be keeping an eye on the release, and any potential impact that this may have on Q2 GDP. The only other release of note this morning is the Eurozone Producer Prices Index, forecast to show inflation of 2.4% on a year on year basis.

The afternoon session is also light on major data releases, with only US Factory Orders of note. This is forecast to show a decrease of 0.4% compared to the previous month. Completing the afternoon session is a speech from MPC Member Tenreyro with Sterling traders looking for hints of a rate hike from the BoE this year.

The quiet slate of data sets the tone for the week ahead, with only UK Services PMI (Tuesday) and Canadian Trade Balance (Wednesday) standing out as possible market movers.

 

Today's Economic Calendar

Time Currency Release Consensus Previous
08.30 GBP PMI Construction (May) 52.0 52.5
09:00 EUR Producer Price Index (MoM) (Apr) 0.3% 0.1%
09:00 EUR Producer Price Index (YoY) (Apr) 2.4% 2.1%
14:00 USD Factory Orders (MoM) (Apr) -0.5% 1.6%

Caxton