The United States Dollar is slipping this morning after managing to retain some strength through yesterday’s session, ahead of key employment data tomorrow morning and a few speakers from the Federal Reserve this afternoon.
Overview
FX trading in general following the US election has been quite volatile, and markets show no signs of returning to calmer waters any time soon. Bitcoin also cleared the $100,000 threshold overnight after incoming President Donald Trump selected Paul Atkins, a pro-crypto figure, to run the Securities and Exchange Commission in his new administration. The current administration has been decidedly anti-crypo, so this makes for quite a shake up on the regulatory side and is pushing risk assets as a whole into the green today.
Initial jobless claims from the US, released at 8:30 this morning, did show that more people than expected are now without employment. This is a weekly reading, however, and the Thanksgiving holiday last week did disrupt the data calendar, so such a release should be treated with appropriate discernment. JOLTS job openings, released Tuesday morning, showed that more jobs than expected were open in the month of October, but traders are mainly looking ahead to tomorrow morning’s non-farm payroll and unemployment rate release. Nonetheless, the larger story is that the US labor market does appear to be cooling, and tomorrow’s release is expected to confirm such a narrative. Current market expectations are that the US economy added 215,000 jobs in November, but following October’s rather noisy reading that was impacted by both severe weather and strikes there is substantial room for a surprise on either side of that figure. The unemployment rate is expected to hold steady at 4.1%.
Following a very hectic start to the month data-wise, next week should bring about calmer waters for the Dollar as the domestic calendar is very bare. We will see November’s CPI inflation reading next Wednesday, but Monday and Tuesday are likely to be steadier trading than we have seen over the last few sessions.
What to Watch This Week…
- Eurozone Q3 GDP, Friday
- US Non-Farm Payrolls, Friday 8:30AM
- Monex USA Online is always open
EUR ⇑
The single currency is trading substantially stronger this morning, even following a vote of no confidence that toppled French Prime Minister Michel Barnier. Such an outcome was very nearly completely priced in by markets ahead of time, though, so there was only a very muted reaction in EURUSD through yesterday’s session. The final reading of Q3 Eurozone GDP is due out tomorrow morning, expected to show sluggish-at-best growth from the region. Quarterly growth is expected to come in at 0.4% and annualized growth at just 0.9% – not the showing of strength that the European Central Bank in particular wants to see.
GBP ⇑
Pound Sterling is also seeing some resurgent strength against the Buck this morning, trading roughly a third of a percent stronger than at yesterday’s close. This move is primarily driven by some broader Dollar weakness today, but UK government bond yields have edged a touch lower this morning as well. The UK Decision Maker Panel lifted its annual inflation expectations for next year to 2.8%, a marked rise from October’s 2.5% forecast. The final UK GDP reading for Q3 is due out next Friday, so in all likelihood the GBPUSD currency pair will be treading water until then with a sparse data calendar ahead of that.
