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RedFX Snap - US employment data to move markets

Here’s a quick market update while you wait on the NEWSLETTER!

After a week interrupted by Holidays in US UK and Europe, US Non-Farm Payrolls (employment data) this afternoon which will be closely watched. With such a tight labour market, interpreting the ‘headline number’ will be difficult, but this month’s employment number could give the USD direction in the medium-term.

 

With the path of US interest rates basically locked in at a rapid pace, it is the mix of employment, inflation and supply chain that will decide the path for the greenback.

 

EUR/USD has rebounded off recent lows near 1.0550. The market has been as low as 1.0350 .. but that low level seems a long way off now. The rebound is due to EURO strength(the ECB is becoming aggressive at signalling rate hikes in the medium-term) and a pull-back in USD strength.

GBP/USD has NOT rebounded to the same extent. This is due to GBP being under pressure – the FX market is starting to realise the extent of weak data in the UK:

  • UK Manufacturing at 16mnth low

  • UK new Orders at 2yr low

  • UK BRC shop price inflation at 10yr high

  • Confidence at 2yr low

 

GBP/USD around 1.2550 today, hit 1.2200 level in early May, and was trading at 1.3200 in late March. Volatility set to continue, I suspect.

 

Please call and email for all your FX and payments needs, or simply to discuss strategies around this afternoon’s data.

 

The RedFX Team

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