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Market Update
The main story of the morning is the buck, as the US dollar index continues its recent breakout and has gained strength against Asian currencies and most major currencies this morning. The overall consensus amongst analyst is that the US dollar currency is rallying because investors expect the US economy to outperform most other economies in terms of growth.
In terms of intraday strength, the US dollar currency is still making strong headway against the euro, Japanese yen, and the Swiss franc currencies. Commodity-related currencies are holding up somewhat better against the greenback.
Sterling continues to hold onto yesterday’s gains after the British pound rallied after the BOE ruled out negative interest rates. The British pound is starting to de-couple from other major currencies who are suffering losses against the US dollar.
Yesterday’s lower than expected initial jobless claims headline number from the United States economy is also helping the US dollar index in terms of momentum going into today’s Non-farm payrolls job report.
The Reserve Bank of Australia stuck to script earlier today when they delivered the Quarterly economic report and reiterated much of the commentary from the February monthly policy meeting earlier this week.
RBA Governor Lowe said that more QE is not out of the question, which sent the Australian dollar somewhat lower on the day. The RBA also upped their growth forecasts for the Australian economy and noted that inflation goals will likely not be met until 2024.
Earlier this morning Australian retail sales data for the month of December came in at -4.1%, which was much worse than consensus forecasts and also softer tba the November retail sales headline number. The AUD/USD pair only showed a muted reaction.
Gold and silver have staged a minor recovery this morning after both metals came under heavy downside pressure yesterday. Gold is trading back towards the pivotal $1,800 resistance zone, while silver is attempting to head back towards its weekly opening price.
Both WTI and Brent are on track for a fifth-straight days as the recent OPEC meeting continued to reinforce the notion that committee are sticking to supply constraints. Brent traders now have their sights set on $60.00.
Upcoming News
The economic calendar is clearly going to dominated by the Non-farm payrolls job release later today. For all intent and purposes the rally in the US dollar index is likely to continue unless a massive surprise to the downside takes place.
Aside from the US monthly jobs report, a few other key events on the economic calendar are worth paying attention to. Bank of England Governor Andrew Bailey is set to deliver a scheduled speech later today, in the first appearance since the BOE policy meeting.
Traders will also be awaiting the Canadian monthly jobs report. A negative headline number is expected, and the Canadian unemployment rate is expected to come higher and rise to +8.9 percent today.
Something to watch is the USDCAD currency pair. The current bid on oil is helping to maintain the strength in the Canadian currency. If the US and Canadian economies start to diverge then the USDCAD could be the trade to watch.
