United States Dollar: After decent risk buying of GBP/USD on Friday morning and throughout much of last week the USD is fighting back. The dollar is firmer after US nonfarm payrolls, released on Friday afternoon, came in better than market forecasts. According to the figures 151,000 jobs were created in October vs. expectations for 63,000. The US unemployment rate remains at 9.6%. After a week of negative USD news flows the data was enough to see markets take profit on some short dollar positions ahead of the weekend and GBP/USD fell back to 1.6110. It opens this morning at 1.6160. Despite the recovery in the USD on Friday and overnight the tone is still negative for the currency. It will be interesting to see if this recent set of payrolls data helps to support another bout of risk appreciation later this week. Also important this week will be the Bank of England”s Inflation Report, which will hopefully paint a clearer picture of why the central bank decided to avoid QE.
– We expect a range today in the GBP/USD rate of 1.6040 to 1.6200
Euro: The USD is stronger across the board this morning following the better than expected NFP figures. It has been part of the reason for seeing EUR/USD slip back below the 1.4000 big figure. Also weighing on the single currency is the recent widening of peripheral European bond yields. This comes as concerns deepen over the outcome for elections in Greece and the state of the Irish budget. The spread on this debt is in huge contrast to that paid on German bunds. Angela Merkel has made it clear that she is not comfortable with German taxpayers having to support these other weaker European economies which may of course lead to tensions between her and the ECB. Add to this the release of weak German Factory Orders data on Friday and EUR/USD opens lower compared to where it traded this time last week. It opens at 1.3950. As the Euro slips below 1.4000 against the greenback it has also fallen against the pound. GBP/EUR now threatens a move through 1.1600.
– We expect a range today in the GBP/EUR rate of 1.1510 to 1.1600
Aussie and Kiwi Dollars: AUD/USD is volatile and remains so, but also looks convincingly like it will hold above parity for a good part of this week. An analysis of positions would suggest that markets are well long the currency currently, but with the threat of further interest rates early next year and a mining boom driven by insatiable Chinese demand it may not necessarily mean that the currency is overvalued. It opens at 1.0120. NZD/USD has ended its push higher and fallen 50 points following news of a suspected kiwi fruit vine infection. The matter is still being investigated and the fruit only makes up 2.5% of the NZ export sector but it has still knocked the Bird from its highs and it trades this morning at .7880, this after trading to a high of .7970 on Friday. GBP/AUD and GBP/NZD are steady this morning and trade at 1.5965 and 2.0445 respectively.
– We expect a range today in the GBP/AUD rate of 1.5820 to 1.6090
– We expect a range today in the GBP/NZD rate of 2.0340 to 2.0570
Data Releases:
- AUD: NAB Business Confidence
- EUR: Sentix Investor Confidence, German Industrial Production
- GBP: BRC Retail Sales Montior, RICS House Price Balance
- NZD: No data due for release today
- USD: No data due for release today
