Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Cable Wobbles On Brexit Worries As Markets Look To Nonfarm Payrolls

Published 02/05/2016, 05:52 AM
Updated 07/09/2023, 06:31 AM

Market Drivers Feb. 5, 2016

Europe and Asia
AUD: Retail Sales 0.0% vs. 0.5%
EUR: Factory Orders -0.7% vs. -0.3%

North America
USD: NFP 8:30
CAD: Employment 8:30

It’s been a typically quiet pre NFP night in FX trade as markets essentially remained motionless ahead of the key event of the week – the US NFP report due 13:30 GMT today.

The one exception was the pound which wobbled in early morning London dealing on latest polls that showed 45% of respondents willing to leave EU while only 36% wanted to stay. The near 10% gap is a troubling sign especially given the generally positive rhetoric coming out of Brussels on the latest round of negotiations.

Cable quickly swooned to test the 1.4500 level but then just as quickly rebounded to 1.4550 as dip buyers appeared. With nearly 20% of the vote undecided the market hopes are that the stay vote will eventually prevail, but the danger of Brexit remains very real and could cause havoc not only on GBP/USD trade but in EUR/USD trade as well as it could open the way for general EU fracture.

For now the markets are likely to focus on the latest US labor data readings and as our colleague Kathy Lien noted,

“There are many reasons for Friday’s payrolls report to miss not the least of which is that a correction is expected after last month’s surprisingly strong report. Economists are looking for job growth to slow to 190k but based on other labor market related readings, the level of job growth could be even lower. Taking a look at the list below there are many red flags, the most important of which are the sharp declines in the employment component of the two ISM reports. This subcomponent of the non-manufacturing (service sector) index matched its 1 year low.”

Any miss on the NFP data could send the dollar even lower and create a key test for USD/JPY which has been able to hold above the 115.00 level for nearly two year. That pair has been tested nearly 5 times since then and a break there would essentially be the nail in the coffin for the long USD/JPY trade confirming that the pair set a multi year top. With 10 year rates at 1.84% and the buck under assault the markets are coming to the conclusion that the Fed normalization process has basically turned into a one and done.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.