Sterling Falls on BoE; Dollar Awaits NonFarms

Sterling plummeted yesterday after the Bank of England kept interest rates on hold, Andy Haldane withheld from joining the two remaining hawks, and the Bank cut its 2017 growth forecasts. Sterling-euro dropped approximately 1.2% to hit a new low since the pound’s October flash crash, below 1.1060. Sterling-dollar tumbled below 1.3200 to its lowest levels this month, but held above 1.3100.

Previous Day's Market Highlights

Sterling plummeted yesterday after the Bank of England kept interest rates on hold, Andy Haldane withheld from joining the two remaining hawks, and the Bank cut its 2017 growth forecasts. Sterling-euro dropped approximately 1.2% to hit a new low since the pound’s October flash crash, below 1.1060. Sterling-dollar tumbled below 1.3200 to its lowest levels this month, but held above 1.3100.
 
The dollar remained weaker against the euro but failed to regain the 1.1900 level. US data were mixed. The Chicago Purchasing Managers’ Index fell more than forecast, while Pending Home Sales picked up more than expected from May to June.
 
Sterling fell against the commodity currencies as well but held clear of one-month lows. 

Today's Market Highlights

The main event today is this afternoon’s US July jobs report. As markets look for signs that the Fed may raise interest rates again later this year, they will keep a close eye on labour market data. A strong labour market has been one of the arguments for higher interest rates.
 
In addition to the NonFarm Payrolls figure, attention will be on average wages. Slow wage growth has been a point of concern amidst a tightening labour market. The dollar could strengthen if the data surprise to the upside, but any slowdown in wage growth may weigh.
 
Canadian dollar traders will keep an eye on trade and employment data this afternoon (13:30 BST). 

Today's Economic Calendar

Time Currency Release Consensus Previous
13:30 USD Nonfarm Payrolls (Jul) 183K 222K
13:30 USD Average Hourly Earnings YoY(Jul) 2.4% 2.5%
13:30 USD Average Hourly Earnings MoM (Jul) 0.3% 0.2%
13:30 USD Unemployment Rate (Jul) 4.3% 4.4%
13:30 USD Trade Balance (Jun) $-45.0B $-46.5B
13:30 CAD International Medchandise Trade (Jun) $-1.35B $-1.09B
13:30 CAD Unemployment Rate (Jul) 6.5% 6.5%
13:30 CAD Net Change in Employment (Jul) 10.0K 45.3K
15:00 CAD Ivey Purchasing Managers Index (Jul) 59.2 61.6