Price stability as markets await US non-farm payrolls data tomorrow

<p>The FX markets have seen a slight uplift in volatility in Asia following on from better US data that gave the dollar a boost as the […]</p>

The FX markets have seen a slight uplift in volatility in Asia following on from better US data that gave the dollar a boost as the market finally looks past weather distortions. The ADP report showed a gain of 191k in private non-farm payrolls in March, which was close to the 195k consensus forecast. It was the revision last month from 139k to 178k, however, that signalled the move as NFP forecasts were revised higher. Most are now looking for 225k+ on Friday.

The Asia session has seen the commonwealth currencies trade under pressure following data from Australia and China. Australian retail sales disappointed at 0.2% for the month of February, versus the 0.3% expected. The official Chinese non-manufacturing PMI data for March came in at 54.5 versus 55 in February, with the HSBC service PMI reading showing a slight positive, up 0.9 on the month to 51.9.

Sterling saw a rare move in the overnight session as the market focused on a media report in The Northern Echo. The BoE Governor has said that there could be an interest rate increase in the UK before the next General Election (scheduled May 2015), although he did state that any increases would be ‘gradual’ despite the fact that the UK economy is growing faster than any other developed nation.

This morning will see the release of service sector PMI data from Europe and the UK, with the latter always used as a growth gauge. The main event today will no doubt be the ECB meeting and the subsequent press conference as IMF Chief Christine Lagarde suggests more easing is needed in the EU and that unconventional measures are now required. The market has very little action priced into the meeting following ECB Mario Draghi’s hawkish press conference last month, with ECB members Wiedmann and Constancio echoing these comments in the last few days that inflation pressures will start to build again in the coming months. Eurozone inflation has now been below 1% for the past six months, which surely must be getting very concerning, especially with the ECB mandate always being ‘price stability’.

 

EUR/USD

Supports 1.3750-1.3705-1.3685 | Resistance 1.3820-1.3880-1.3965

 

USD/JPY

Supports 103.70-103.40-102.80 | Resistance 104.20-104.85-105.00

 



GBP/USD

Supports 1.6620-1.6590-1.6540 | Resistance 1.6685-1.6720-1.6750

 

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.