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Pound in a pickle with NFP eyed

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USD

The greenback experienced an uptick yesterday on the back of Treasury Secretary Mnuchin’s comments that a detailed tax reform plan will be implement before the year end. He also added the debt ceiling headline could be moved forward to free up funds required for Hurricane Harvey related relief efforts.

On the economic data front, an official report showed that U.S. pending home sales unexpectedly fell as much as by 0.8% in July, compared to expectations for a gain of 0.5%.US Challenger job cuts rose 5.1% while the core PCE price index printed expected results at a 0.1% increase. The Chicago PMI remained untouched at 58.9 while pending home sales decreased by 0.8%.

On the economic calendar for Friday, markets are awaiting Non-Farm Payrolls, which is expected to rise by 180k in the August. In addition, the US ISM manufacturing, which is likely to rise to 56.5 from 56.3, is also due.

  • The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up +0.18%, to settle at 92.83 pips.

EUR

The common currency handed back some of its recent gains in spite of upbeat Eurozone CPI expectations. Rumours that Eurozone officials are uncomfortable with the Euro strength, have led to doubts the European Central Bank with taper asset purchases any time soon. Headline flash CPI increased to 1.5% while the core CPI held firm at 1.2% as predicted.

GBP

The British pound founds itself in a bit of a pickle after the European Union’s lead Brexit negotitator Michel Barnier said that, the two sides remain “quite far from being able to say that sufficient progress has taken place” to begin to discuss a new trade deal. MPC member Michael Saunders presented his typical hawkish comments but also cautioned that Brexit could challenge consumer and business confidence. The UK manufacturing PMI is on the tap today and a dip to 55.0 from 55.1 is predicted.

JPY

The Japanese yen handed back some of its recent gains on the back of data coming in weaker than anticipated. Preliminary industrial production decreased by 0.8% while housing start also sank by 2.3% verses an expected 0.2% fall. Final manufacturing CPI, capital spending and consumer confidence data are due.

Gold

Earlier today, Gold prices edged higher closer to 9 ½ month highs. A positive interpretation on the Chinese manufacturing sector, indicating a healthy growth in the world's second largest economy, assisted an already resilient market sentiment and was seen weighing on the precious metal's safe-haven demand. In addition to this, a slight pickup in greenback demand further hindered demand for dollar-denominated commodities and reaffirmed gold’s modest retracement.

Spot gold fell as much as 0.2%, to settle at $1,318.81. However, looking at the bigger picture, the precious-metal has settled above the key psychological $1300 level in each of the past four trading sessions, back by persistent geopolitical concerns and diminishing prospects of any additional Fed rate hike action by the end of this year.

Oil

Earlier today, oil prices declined with WTI down by -0.97% to $ 46.77 amid worries about how high production from the United States could hinder price recovery and delay rebalancing. Brent Oil Futures - Nov 17, fell as much as 0.98%, to settle at $ 52.34.

The most important economic events:

  • USD Change in Non-farm Payrolls (AUG): (GMT 12:30) – Important – Forecast (180k) – Previous (209k).
  • USD Unemployment Rate (AUG): (GMT 12:30) – Important – Forecast (4.3%) – Previous (4.3%).
  • CAD Markit Canada Manufacturing PMI (AUG): (GMT 12:30) – Important – Forecast (N/A) – Previous (55.5).
  • USD ISM Manufacturing (AUG): (GMT 12:30) – Important – Forecast (56.5) – Previous (56.3).
  • USD ISM Employment (AUG): (GMT 12:30) – Important – Forecast (56.5) – Previous (55.2).

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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