Strong ADP US Jobs numbers last night have encouraged USD buyers and put expectations on the NFP tonight to be better than the 180k forecast by economists.
USD/JPY has enjoyed the first rally in 6 days back up to Y111.40 but with US 10 yr yields stubbornly low the sustainability of the rally is in doubt. With stocks at near record highs already the underperformance of the USD/JPY is very noticeable in what should be very good conditions for a rally so close to the FED raising rates.
EUR/USD pared back some of its recent gains as well but is still holding onto the 1.1200 level. Next week the ECB meeting is the main event and alot of the rally is built on tapering timeline and change in tone from Draghi.
GBP/USD is recovering from UK election poll scares and was the strongest currency overnight ending at 1.2900. Further gains are unlikely will we get results from next elections and downside risks from weekend polls are very real.
Technically we have a new trade developing in the AUD/USD which has broken lower on the back of weak Australian and Chinese data yesterday. There has been very little bounce so far and with iron ore at 8 month lows the outlook is darkening. Australian CAPAX yesterday showed very weak spending plan outlooks and Chinese Private Manufacturing PMI dropped below 50 into contraction territory. Many banks are updating their Australian GDP forecasts to contraction.
Major Trendline Support approaching and a break targets 0.6900.
TonyD
