British Pound Live On Friday 5th July: Pound dollar Plummets To 3 Month Lows After Better Than Expected US Non-Farm Payrolls
After a busy day yesterday for Europe and the UK which saw both the pound and the euro make big moves across the board, traders eyes now turn to North America where the US will be releasing the all-important Non-Farm Payrolls as well as their unemployment data whilst Canada also release their unemployment rate data and the purchasing managers index.
Highlights
@ 13.30 US Non-Farm Payrolls 30k Higher Than Expected - GBPUSD plummets
11.10 GBP Continues To Move Down Ahead Of US Data Reaching 3 Month Lows
11.00 Germany Factory Orders Show Decline of 1.3%, Down Significantly On Market Expectation Of A 1.2% Gain
15.20 Traders Remain Bullish On GBP Outlook Across The Board, But Are Split on GBPJPY
Despite big falls in the GBPUSD following the Bank of England comments yesterday and the positive Non-Farm Payrolls today, traders using the OANDA platform are bullish on the pair, with 65.52% of open pound dollar trades currently long. Traders also remain bullish on the pound against the Euro, with 65.51% of EURGBP trades currently open being shorts, and the swiss franc with GBPCHF currently having 60.15% long trades.
Less clear is their opinion on GBPJPY though open positions suggestions suggest a slight favouring of the pound once again, 53.88% of open GBPJPY trades are long as opposed to 46.12% shorts. Of the 14 major pairs recorded in the data, GBPJPY remains the most tightly split.
On the opposite end of the scale the Australian dollar is seeing strong support against the Japanese Yen (79.02% of AUDJPY trades are currently long) and the Euro (74.76% of EURAUD trades are short).
15.00 Canadian Employment Figures Little Changed
Employment fell by 400 last month after May’s surge of 95,000 while the jobless rate was unchanged at 7.1 percent, Statistics Canada said today in Ottawa. Analysts were predicting a 7,500 job decline and an unchanged jobless rate.
13.47 GBPUSD Plummets On Positive US Employment Figures
US Non-Farm Payroll figures were much better than expected this week, giving more strength to the possibility of a tapering of Quantative Easing by the Federal Reserve. 195K new jobs were created last month, 30k more than was predicted by analysts (the consensus was £165k). However, the US jobless rate has not fallen having remained at 7.6% rather than dropping by 0.1% as analysts expected.
The US also revised data from April and May, increasing May from 175,000 to 195,000 and April 199,000 from 149,000.
GBPUSD plummeted on the news and is currently down 1.26% at 1.4882.
12.30 Pound Sterling Remains In The Red
The pound remains in the red in the lead up to the US Non-Farm Payrolls Data.
The euro to pound exchange rate is 0.35 pct higher at 0.8598.
The pound to US dollar exchange rate is down 0.60 pct at 1.54981.
The pound Australian dollar exchange rate is 0.90 pct lower at 1.6331.
The pound Japanese yen exchange rate is 0.63 pct lower at 149.8150.
Please note that these are spot market quotes to which your bank will affix its own discretionary spread. However, an independent FX provider will guarantee to beat your bank's offer, thus delivering you more currency. Please find out more here.
12.00 Would Strong US Non-Farm Payrolls Be A Good Thing?
Dean Popplewell, Chief currency strategist at OANDA, said that whilst most analysts except a similar figure or lower to last months, the danger could be if it is much better than predicted, "The biggest risk for today would likely be the reaction to a particularly strong reading. An aggressive positive headline would only exacerbate any ensuing sell-off as both dealers and investors swiftly price in a greater probability of tapering occurring sooner rather than later."
11.25 Pound Sterling Reaches 3-month Lows Against The US Dollar
The pound dollar has reached new lows ahead of the Non-Farm Payrolls despite the release of several positive economic data releases from the UK over the last few weeks, thanks to the Bank of Englands comments on the weak growth in its economy.
Jane Foley, senior currency strategist at Rabobank International said of the developments, ‘Carney caught the market unawares, he was attempting to ensure that market expectations remain more focused on the UK economy than the US. He wanted to draw attention to the fact that the recovery is very nascent, very fragile. That leaves the Pound weaker.’
GBPUSD reached three month lows today and currently lies at 1.4965, down 0.71%.
11.15 Germany Factory Orders In Surprise Fall For Second Month In A Row
Germany posted an unexpected fall in factory orders for the second month in a row today, showing that the Europes troubles are far from over. The orders, adjusted for seasonal swings and inflation, showed a decline of 1.3% which is actually slightly better than April where they fell 2.2% - but still a lot worse than expected. Market analysts suggested an increase in the region of 1.2%.
Henrich Bayer, economist at Deutsche Postbank, said of the news, “the economic picture for Germany is still affected by the uncertainty in the euro-area economy, confidence is improving and growth is returning. The situation could definitely be worse.”
10.23 GBPJPY Technical Analysis
GBP/JPY has broken the support at 151.26. Despite the rising trendline, a short-term correction is likely underway. An initial support lies at 150.30 (04/07/2013 low) but a stronger support lies at 149.26. Hourly resistances can be found at 151.26 (previous support) and 153.02.
The longer term may well see a rise towards the strong resistance at 163.09 (07/08/2009) if the key support area between 146.46 (16/04/2013 low) and 145.88 (15/03/2013 high) can hold. A break of this resistance in the coming months looks unlikely.
10.00 EURGBP Moves Higher In Early Trading
The Euro Pound has moved up in morning trading but the NFP’s from the US could be the real market movers, even for EURGBP. The markets will be looking for strong figures to support the Feds previous comments that any tapering of the quantative easing program will be subject to positive economic data.
EURGBP breached the 0.8600 mark yesterday before pushing on up to 0.8634, but it was short lived as the pair fell off a cliff following the European Central Bank’s equally dismal statements.
The market continues to hold over the 55 day ma at 0.8506 and the range lows at 0.8570. 0.8597 continues to represent a break point on the topside to the 0.8636 April high and the 0.8793/0.8814 highs seen earlier in the year. Failure at 0.8470, although less favoured, would re-target to the 0.8422 mid-May low and the 2012-13 support line at 0.8414.
09.40 GBPUSD Breaks Through The 1.5000 Mark, But Where Will It Go Next?
GBP/USD declined sharply yesterday and broke the 1.5000 mark today, though so far that was brief, it does bring into question the 1.5009 support. A key support lies at 1.4832. The short-term technical configuration remains negative as long as prices remain below the resistance at 1.5130 (03/07/2013 low). Another resistance can be found at 1.5305 (03/07/2013 high).
In the longer-term, the break of the horizontal range defined by the strong support at 1.5235 (13/01/2012 low) and the strong resistance at 1.6302 (30/04/2012 high) calls for a further medium-term decline. The decline from the top at 1.5752 is viewed as a new phase of weakness. However, monitor the supports at 1.5009 and 1.4832 given the increasing short-term oversold conditions.
09.21 Morning Spot Rates As Pound Losses Ground In Major Pairs In Aftermath of BoE Decision
The pound has started the day weaker across the board with the GBPUSD having breached the 1.500 mark overnight. Current Rates are:
The euro to pound exchange rate is 0.21 pct higher at 0.8586.
The pound to US dollar exchange rate is down 0.40 pct at 1.5011.
The pound Australian dollar exchange rate is 0.56 pct lower at 1.6386.
The pound Japanese yen exchange rate is 0.20 pct lower at 152.4590.
Please note that these are spot market quotes to which your bank will affix its own discretionary spread. However, an independent FX provider will guarantee to beat your bank's offer, thus delivering you more currency. Please find out more here.
08.45 What To Expect From The US Non-Farm Payrolls
As arguably the most important data release for the US, the non-farm payrolls can have huge effects on markets going far beyond just the USD pairs. This month the expectation is that there will be an increase of 165k jobs – following on from May where there was an increase of 175k.
Recent economic data has given mixed signals about the growing strength in the economy so there has been some hesitance with the current outlook, many traders are suggesting that the predictions may be a little too optimistic.
Jan Hatzius, chief economist at Goldman Sachs, said: "We expect a fairly lacklustre employment report for June, with non-farm payroll growth of 150,000, similar to the average of the past three months."
07.40 Todays Key Events As America Take Their Turn
It’s North America’s turn to give us some data today after their 4th July Independence Day holiday saw significant moves back across the pond here in the UK and Europe.
11.00 (Germany) Germany release their factory order data and whilst it has virtually no impact on the Eurozone GDP, it can have an effect on the Euro short term as an indicator of the economy of the leading Euro member nation.
13.30 (Canada) The Unemployment Rate released by the Statistics Canada is the number of unemployed workers divided by the total civilian labor force. It is a leading indicator for the Canadian Economy. If the rate is up, it indicates a lack of expansion within the Canadian labor market. As a result, a rise leads to weaken the Canadian economy. Normally, a decrease of the figure is seen as positive (or bullish) for the CAD, while an increase is seen as negative or bearish. This will also include data on the net employment change.
13.30 (US) The US Non-Farm Payrolls, a potentially big mover for the USD, presents the number of people on the payrolls of all non-agricultural businesses. The monthly changes in payrolls can be excessively volatile. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish).
13.30 (US) As well as the NFP’s and data on average on hourly earnings, the US also release information on the Unemployment Rate released by the US Department of Labor is the number of unemployed workers divided by the total civilian labor force. If the rate is up, it indicates a lack of expansion within the US economy. Therefore, a decrease of the figure is seen as positive (or bullish) for the USD, while an increase is seen as negative (or bearish) – either way the data can have a big impact on the currency.
15.00 (Canada) Back to Canada as they release their Ivey Purchasing Managers Index.