Will The NFP Keep The USD Rally Going?

USD Strong Ahead of NFPs

The US dollar ends the week firmly higher as recent upside data surprises have helped keep sentiment positive. Trump’s impeachment acquittal has also boosted the dollar, with the index trading 98.48 last. Looking ahead today, the US employment reports are the main data focus.  Following a strong ADP reading earlier in the week, the market will be looking for a solid reading today (163k) which should keep USD well bid.

Euro Under Pressure

EURUSD has been lower over the week as the rally in USD weighs on the single currency. EURUSD has now broken back below the 1.10 support. It’s been a quiet week for Eurozone data. Although comments from ECB’s Lagarde earlier in the week (highlighting the risks from coronavirus) have put downside pressure on the Euro.

GBP Lower Again

GBPUSD has been under pressure this week also. Despite better UK data earlier in the week (manufacturing moved back up to the 50 level), concerns over the UK/EU trade talks have weighed on GBPUSD. The pair is now sitting just above the 1.29 level support.

Risk Appetite Weakens

Risk assets have been lower again today. Despite a rally earlier in the week in response to reports of a potential vaccine for the Wuhan virus, the market is now starting to reverse following confirmation from the World Health Organisation which said that a vaccine has not been found. The SPX500 trades 3333.68 last, reversing lower from the recent 3358.63 highs.

Safe Havens Rally

Safe havens have been higher on Friday as the reversal lower in equities fuels a return to safe-haven buying, leading both JPY and gold higher against USD. USDJPY trades 109.72 last, turning lower from the recent 110 highs. XAUUSD trades 1569.33 last, as the recovery off the 1547.53 lows continues.

Crude Lower

Oil prices have been a little weaker today as the fall back in risk appetite has weighed on price. On Wednesday, the EIA reported a 3.4 million barrel increase in US crude inventories which has heightened concerns about the demand environment once again. Crude trades 51 last.

Loonie Breaks 1.33

USDCAD has been firmer again today with price breaking out above the 1.33 level as the weakness in crude weighs on CAD. The Canadian unemployment rate later today will be the main domestic data focus.  With the USD rally in good health, further upside looks likely here while the market remains above the 1.33 level.

Aussie Lower Following RBA Statement

AUDUSD has been heavily lower again today, extending a week of losses. The RBA releases its quarterly SoMP overnight which saw the bank lowering its growth forecasts and acknowledging risks (domestic and global) while reiterating its willingness to ease further if necessary. AUDUSD is testing the .6683 level, having traded down to fresh lows earlier in the session.