Kantox currency update: dollar picks up ahead of the U.S. non-farm payrolls
The dollar has trimmed recent losses fuelled by Trump’s willingness to meet with North Korean President Kim Jong Un and by yen weakness after the dovish tone of the Bank of Japan monetary policy statement, where Government Kuroda has shown no rush to exit the QE programme.
Furthermore, market concerns about the possibility of a commercial war receded on Thursday as Trump softened its stance towards tariffs, announcing exemptions for Mexico, Canada, and probably other countries,
EUR/USD dives to 1.2300 after the ECB meeting. The euro plummeted from levels above 1.2400 to the 1.2300 area on Thursday after ECB president Draghi maintained his pledge to extend the stimulus programme beyond September, following the bank’s monetary policy meeting. At London market opening times, the EUR/USD is trading at 1.2315.
GBP/USD: capped at 1.3900, returns to 1.3800. The sterling dropped sharply on Thursday, to give away most of the last day’s recovery, weighed by fears that the disagreement over the status of Northern Ireland might delay the transition deal. At London market opening times, the GBP/USD is trading at 1.3825.
USD/JPY extends recovery and approaches 107.00 The dollar stretched higher overnight, buoyed by higher expectations of easing tensions with North Korea and by the cautious stance of the Bank of Japan, to break through the top of the last days’ trading range, reaching one-week highs at 107.95. At London market opening times, the USD/JPY is trading at 106.75.
In the Calendar Today
At 09:30 GMT we will be attentive to the UK manufacturing and industrial production. The pound is suffering bearish pressure on the back of the recent setback on the Brexit negotiations, and, in this context, further downbeat news from the manufacturing sector would only increase pound weakness.
At 13:30 GMT all eyes will be on the U.S. Non-Farm Payrolls, and the average hourly earnings. The wage growth acceleration observed in January has boosted expectations of a ramp up on the Fed tightening path, which had a positive impact on the dollar, a trend confirmation in February, might offer further support to the USD.
09:30 GMT UK: Manufacturing Productions (MoM) (Jan)
Previous: 0.3% Expected: 02%
09:30 GMT UK: Industrial Productions (MoM) (Jan)
Previous: -1.3% Expected: 1.5%
13:30 GMT U.S: Non-Farm Payrolls (Feb)
Previous: 200K Expected: 200K