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Kantox currency update: dollar eases on US political uncertainty

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The dollar traded lower on Thursday, especially against the Japanese yen, which was favoured by market concerns about the increasing tensions within the Trump’s administration and his unpredictable stance against US major trading partners.

Investors today will be watching August’s non-farm payrolls report. The unofficial ADP report showed an increment of 163K in employment last month which, far from being a bad reading, it reveals that the pace of job creation might have started to slow down after peaking earlier this year.

EUR/USD: consolidates above 1.1600: The euro has remained steady over the latest sessions, trading between 1.1600 and 1.1650, after bouncing up from 1.1530 area. As at London market opening times, the EUR/USD is trading at 1.1640.

GBP/USD: advances above 1.2900The pound extended its recovery from week lows at 1.2785, to reach levels beyond 1.2900 although it remains weighed by market concerns about Brexit uncertainty. As at London market opening times, the GBP/USD is trading at 1.2935.

USD/JPY pulls back below 111.00. US dollar rebound from 110.70 lows was capped again at 111.80 area and the pair pulled down on Thursday, to hit two-week lows at 110.40, with the yen supported by safe haven flows on concerns about the political uncertainty in the US. As at London market opening times, the USD/JPY is trading at 111.45.


In the Calendar Today

In the Euro Area, Eurostat will release the second reading of the Eurozone Q2 Gross Domestic Product, which is expected to confirm that eurozone economy grew at a 2.2% year on year pace. Only a clear revision of these figures would produce a significant effect on euro volatility.

The focus today will be on the US Non-Farm Payrolls report and the average monthly earnings which will be analysed from a monetary policy point of view.  With only three weeks for a key Fed meeting, a strong employment report might offer a fresh boost to the US dollar.

GMT        EUR: Gross Domestic Product (YoY) (Q2)
Previous: 2.2%             Expected: 2.2%

12:30 GMT        USD: Non-Farm Payrolls (Aug)
Previous: 157K             Expected: 191K