Sterling continued to advance fresh 7-month highs.
Risk appetite held steady during Thursday with some encouraging trade remarks from President Trump and Chinese sources, but uncertainty dominated.
A Democrat move to push ahead with Trump’s impeachment fuelled market caution. Global equity markets were mixed with tentative net gains on trade hopes.
Trump stated that trade talks with China were going well and that there could be something on tariffs, but the vague talk did little to impress markets. There were also reports that the two countries continued to disagree over the value of China’s farm purchases from the US. New York equities did close in positive territory which helped underpin confidence and curbed defensive yen demand with USD/JPY settling around 108.75 as narrow ranges prevailed.
The dollar drifted lower and traded at 1-month lows with some speculation over a soft US jobs report limiting support.
US jobless claims declined to 203,000 in the latest week from 213,000 previously, although continuing claims increased. Challenger data recorded a 13.1% increase in layoffs for the first 11 months of 2019 despite a monthly decline. The data overall indicated that the labour market was still firm, but doubts over Friday’s jobs data increased after the ADP data.
The monthly US jobs report will be released on Friday with consensus forecasts for an increase in non-farm payrolls of around 185,000. There will again be an impact from auto workers with the jobs total likely to be boosted by at least 40,000 due to strikers returning to work. Markets will be braced for a relatively weak release following Wednesday’s ADP data. The dollar could gain from short covering if there is a stronger than expected release.
Sterling continued to advance on expectations of a Conservative election victory with GBP/USD at fresh 7-month highs above 1.3150.
Sterling sentiment remained strong during Thursday’s European session with technical breaks the previous day still having a significant impact in triggering further short covering with options markets suggesting the potential for further gains if there is a Conservative victory. The resignation of three Brexit Party MEPs to sit as independents and their call for voters to back the Conservatives maintained market optimism that Prime Minister Johnson would secure a majority victory next week. Opinion polls still suggested a Conservative lead, but surveys over the next few days could trigger significant volatility.
The UK currency gained an element of support from slightly more optimistic central bank rhetoric on the global economy. GBP/USD pushed to 7-month highs near 1.3170 while GBP/EUR remained close to 30-month highs around 1.1850. The UK currency held firm on Friday as GBP/USD traded just above 1.3150.
|07:00||German Industrial Production (M/M)(OCT)||0.10%||-0.60%|
|08:30||GBP Halifax HPI (M/M)(NOV)||-0.70%||-0.10%|
|13:30||USD Average Hourly Earnings (M/M)(NOV)||0.30%||0.20%|
|13:30||USD Private Nonfarm Payrolls (NOV)||-||131K|
|13:30||USD Non-farm Payrolls(M/M)(NOV)||89K||128K|
|13:30||United States Unemployment Rate(M/M)(NOV)||3.60%||3.60%|
|13:30||CAD Employment Change (M/M)(NOV)||15.9K||-1.8K|
|13:30||CAD Full Employment Change(NOV)||-||-16.1K|
|13:30||CAD Unemployment Rate (M/M)(NOV)||-||5.50%|
|15:00||USD Michigan Consumer Sentiment(DEC 01)||95.9||95.7|
|15:00||USD Wholesale Inventories||0.20%||-0.40%|
|18:00||USD Baker Hughes US Oil Count||-||668|
|20:00||USD Consumer Credit(OCT)||-||9.51B|